​Appreciation in a Firm's Local Currency Causes A(n) ____ in Cash

question 17

Multiple Choice

​Appreciation in a firm's local currency causes a(n) ____ in cash inflows and a(n) ____ in cash outflows.

• A) ​reduction; reduction
• B) ​increase; increase
• C) ​increase; reduction
• D) ​reduction; increase

---

Definitions:

Effective Annual Rate

The annual return on an investment or loan taking compounding into account, expressed as a percentage.

Compounded Annually

This is an interest calculation method where interest is added to the principal once a year.

Effective Rate

The actual interest rate of an investment or loan, taking into account the effects of compounding.

Compounded Semi-Annually

Interest calculation method where the interest is added to the principal sum twice a year, causing the interest to earn interest.