Which One of the Following Is Not True

question 226

Multiple Choice

Which one of the following is not true?

• A)An exchange rate is the price of one currency in terms of another.
• B)An exchange rate is the means by which the price of a good in one country is translated into the price to the buyer in another country.
• C)The cost of a foreign good in dollars will depend on the current exchange rate.
• D)The exchange rate will affect the willingness of foreign buyers and sellers to trade with each other.
• E)The exchange rate is the price of a currency in terms of another currency for exchanges of goods and services but not for financial transactions.

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Definitions:

Debt-Equity Ratio

The measure of a company's financial leverage, calculated by dividing its total liabilities by stockholders' equity.

Net Income

The overall earnings of a business following the deduction of all costs, taxes, and expenses from its gross revenue.

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and earnings without having to increase leverage or equity financing.

Equity Multiplier

A financial leverage ratio that measures the portion of a company’s assets that are financed by shareholders' equity.