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Lampon Co. is a U.S. firm that has a subsidiary in Hong Kong that produces light fixtures and sells them to Japan, denominated in Japanese yen. Its subsidiary pays all of its expenses, including the cost of goods sold, in U.S. dollars. The Hong Kong dollar is pegged to the U.S. dollar. If the Japanese yen appreciates against the U.S. dollar, the Hong Kong subsidiary's revenue will ____, and its expenses will ____.
Information Ratio
This ratio measures the excess return of a portfolio over the benchmark's return, relative to the volatility of those excess returns, indicating the portfolio manager's ability to generate consistent excess returns.
Risk-Free Return
The theoretical return on investment with no risk of financial loss, often represented by the yield on government securities.
Sharpe's Measure
A metric used to evaluate the risk-adjusted return of an investment, calculating the excess return per unit of deviation in an investment.
Risk-Free Return
The return on investment that is guaranteed, with no risk of financial loss.
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