The Following Is an Example of an American Term Foreign

question 36

Multiple Choice

The following is an example of an American term foreign exchange quote

• A) $20/£.
• B) 0.85 euro/$.
• C) 100¥/euro.
• D) None of the above.

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Definitions:

Retained Earnings

The portion of net earnings not paid out as dividends but reinvested in the business or kept as reserve.

Cost of Equity

The return a company theoretically pays to its equity investors, i.e., shareholders, to compensate them for the risk of investing in the stock.

Marginal Cost of Capital

The cost of obtaining an additional dollar of new capital, which increases as more capital is raised due to increasing risk and/or decreasing attractiveness to investors.

Investment Opportunity Schedule

A graph or listing that shows the relationship between the rates of return on investment and the amount of investment.