Suppose That a U

question 265

Multiple Choice

Suppose that a U.S. firm converts dollars into pounds in order to invest in a British enterprise in the U.K. A year later, the return on the investment is 12 percent in terms of pounds. If, during that period, the dollar appreciated against the pound, then the return on the investment in dollar terms would be

• A)greater than 12 percent.
• B)less than 12 percent.
• C)also 12 percent.
• D)dependent on the inflation rate, not the exchange rate.

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