A Fall in the Rand's Nominal Exchange Rate in Terms

question 12

Multiple Choice

A fall in the rand's nominal exchange rate in terms of US dollars

• A)will always lead to a fall in the real exchange rate of the rand in terms of US dollars.
• B)may be offset by a rise in the price level in SA so that the real exchange rate of the rand in terms of US dollars is unchanged.
• C)will always make US imports into SA more expensive relative to goods produced in SA.
• D)may make SA a less affordable holiday destination for US residents.

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Definitions:

Capital Investment Analysis

The process of evaluating investment opportunities and their potential returns, often to decide on the allocation of capital resources.

Present Value of Annuity

The current worth of a stream of equal payments made at regular intervals, discounted at a specific interest rate.

Capital Investment Evaluation Methods

Techniques used to assess the value and potential return of investments a business makes in long-term assets, including net present value, return on investment, and payback period analysis.

Average Rate of Return on Investment

A financial metric that compares the amount of profit expected or gained from an investment relative to its cost.