If Interest Rates in Australia Rise, Ceteris Paribus, the Value

question 140

Multiple Choice

If interest rates in Australia rise, ceteris paribus, the value of the Australian dollar will:

• A)rise as foreign investors increase their holdings of Australian investments.
• B)rise as foreign investors decrease their holdings of Australian investments.
• C)fall as foreign investors increase their holdings of Australian investments.
• D)fall as foreign investors decrease their holdings of Australian investments.

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Definitions:

Commercial Substance

A situation where a transaction causes a significant change to the future cash flows of a company.

Book Value

The value of an asset according to its balance sheet account balance, calculated as the original cost of the asset minus any accumulated depreciation, amortization, or impairment costs.

Market Value

Market value refers to the current price at which an asset or service can be bought or sold on the open market.

Disposal

The act of getting rid of something, especially by throwing it away or by selling or giving it to someone.