Which of the Following Affects the Exchange Rate in the Long

question 22

Multiple Choice

Which of the following affects the exchange rate in the long run?

• A) relative productivity
• B) foreign interest rate
• C) expected future exchange rate
• D) all of the above

---

Definitions:

Present Value Index

An investment appraisal tool that compares the present value of net cash inflows generated by a project to the present value of cash outflows, indicating the profitability.

Net Cash Flow

The difference between a company’s cash inflows and outflows in a given period, indicating the company's ability to generate cash.

Amount to Be Invested

The total sum of money dedicated to a particular investment or project.

Present Value Methods

A set of financial techniques used to calculate the current worth of a future stream of earnings or cash flows, taking into account the time value of money.