The Interest Rate in Canada Rises While the Interest Rate

question 323

Multiple Choice

The interest rate in Canada rises while the interest rate in the United States does not change.The

• A) demand curve for Canadian dollars will shift leftward.
• B) demand curve for Canadian dollars will shift rightward.
• C) demand curve for U.S. dollars will shift rightward.
• D) demand curves Canadian and U.S. dollars will remain unchanged.

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Definitions:

Payback Period

The length of time it takes to recover the initial cost of an investment, calculated by dividing the investment cost by annual cash inflows.

Hurdle Rate

The lowest acceptable profit that a project or investment must generate to meet the requirements of a manager or investor.

Projected Cash Flows

Estimates of the amount of money expected to flow in and out of a business over a future period.

Time Value of Money

The principle that a dollar received today is worth more than a dollar received in the future, due to its potential earning capacity.