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In Japan, 90-day securities have a 4% annualized return and 180-day securities have a 5% annualized return. In the United States, 90-day securities have a 4% annualized return and 180-day securities have an annualized return of 4.5%. All securities are of equal risk, and Japanese securities are denominated in terms of the Japanese yen. Assuming that interest rate parity holds in all markets, which of the following statements is most CORRECT?
Solvency
The ability of a business to meet its long-term debts and financial obligations.
Liquidity Ratio
A financial metric used to determine a company's ability to pay off its short-term liabilities with its available liquid assets.
Profitability Ratio
Financial metrics that are used to assess a business's ability to generate income relative to its revenue, assets, or equity.
Solvency Ratio
Solvency Ratio indicates a company's ability to meet its long-term debts and obligations, measuring the size of its after-tax income relative to its liabilities.
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