If Nothing Else Changes, the ________ the Current Exchange Rate

question 201

Multiple Choice

If nothing else changes, the ________ the current exchange rate, the ________ is the expected profit from holding dollars, all other things remaining the same.

• A) higher; larger
• B) lower; smaller
• C) lower; larger
• D) The premise of the question is wrong because the exchange rate has nothing to do with expected profit from holding dollars.

Distinguish between the cost of retained earnings and the cost of new equity.

Calculate a firm's cost of capital considering both before and after a given breakpoint in the marginal cost of capital (MCC).

Assess the influence of growth rates in dividends on a firm's cost of equity.

Apply the concept of weighted average cost of capital (WACC) and understand its components and computation.