Sulsa Inc Uses Fundamental Forecasting

question 42

Multiple Choice

Sulsa Inc. uses fundamental forecasting. Using regression analysis, it has determined the following equation for the euro:

The most recent quarterly percentage change in the inflation differential between the United States and Europe was 2 percent, while the most recent quarterly percentage change in the income growth differential between the United States and Europe was -1 percent. Based on this information, the forecast for the euro is a(n) ____ of ____ percent.

• A)appreciation; 3.4
• B)depreciation; 3.4
• C)appreciation; 0.7
• D)appreciation; 1.2

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Definitions:

Normal Balance

The side (debit or credit) of an account that is increased. For example, assets increase on the debit side, while liabilities increase on the credit side.

Chronological Order

The arrangement of events, numbers, or actions in the sequence that they occurred or were performed.

Debit Normal

Refers to accounts that are increased with a debit transaction and have a natural debit balance, such as assets, expenses, and losses.

Credit Normal

The usual terms or conditions under which credit is extended to customers, including payment due dates and interest rates.