Capital Outflows Occur If

question 32

Multiple Choice

Capital outflows occur if:

• A)domestic interest rates are higher than foreign interest rates.
• B)domestic interest rates are lower than foreign interest rates.
• C)domestic and foreign interest rates are the same.
• D)none of the above.

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Definitions:

Present Value

The modern-day worth of an upcoming sum of money or series of cash receipts, factoring in a chosen rate of return.

Interest

The fee for the right to borrow money, usually stated as a yearly percentage rate.

Compounded Monthly

Describes an interest calculation method where interest is added to the principal sum of a deposit or loan each month, leading to interest on interest.

Annuity

A financial instrument designed to distribute a steady series of disbursements to a person, commonly utilized as a source of income during retirement.