An Increase in Tastes of the Import Commodity of Nation

question 9

Multiple Choice

An increase in tastes of the import commodity of Nation A and export in B:

• A)will reduce the terms of trade of Nation A
• B)will increase the terms of trade of Nation A
• C)will reduce the terms of trade of Nation B
• D)any of the above

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Definitions:

NPV

Net Present Value; a calculation used to assess the profitability of an investment, considering the present value of its cash flows.

Variances

Differences between planned financial outcomes and actual results, used in budgeting and financial management to analyze performance.

Abandonment Option

A form of real option in capital budgeting, giving a company the ability to abandon or terminate a project during its life if it becomes unprofitable.

Discount Rate

A rate of interest utilized within discounted cash flow evaluations to ascertain the present worth of forthcoming cash flows.