If the Interest Rate Is 7 Percent on Euro-Denominated Assets

question 70

Multiple Choice

If the interest rate is 7 percent on euro-denominated assets and 5 percent on dollar-denominated assets,and if the dollar is expected to appreciate at a 4 percent rate,for Francois the Frenchman the expected rate of return on dollar-denominated assets is

• A)11 percent.
• B)9 percent.
• C)5 percent.
• D)3 percent.
• E)1 percent.

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Definitions:

Telephone Operators

Individuals responsible for assisting customers in making telephone connections, including placing and connecting calls or providing information.

Machine-sewn Products

Goods that are manufactured using sewing machines, often implying mass production and consistent quality.

Wage Rate

The amount of money paid to an employee per unit of time, such as an hour or a week.

Capital

Refers to financial assets or the financial value of assets, such as cash and investments, as well as physical assets like machinery or buildings, used in the production of goods and services.