If the Interest Rate on a Bank Deposit in Australia

question 2

Multiple Choice

If the interest rate on a bank deposit in Australia is 3 per cent while a similar deposit earns 6 per cent in Britain, then we could expect that deposits would flow to

• A) Britain regardless of exchange rate expectations.
• B) Britain if the pound is expected to depreciate more than 3 per cent.
• C) Britain if the pound is expected to depreciate less than 3 per cent.
• D) Australia regardless of exchange rate expectations.
• E) Australia if the Australian dollar is expected to appreciate less than 3 per cent.

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Definitions:

Gross Profit Percentage

A financial metric that shows the portion of revenue that exceeds the cost of goods sold, expressed as a percentage.

Net Profit Margin Ratio

An indicator of profitability, calculated as net income divided by revenue.

Total Asset Turnover

A financial gauge assessing how well a company employs its assets to create sales turnover.

Cash Dividend

A payout in cash form from a corporation's profits to the individuals holding its shares.