What Is the Expected Dollar Rate of Return on Euro

question 26

Multiple Choice

What is the expected dollar rate of return on euro deposits if today's exchange rate is $1.10 per euro,next year's expected exchange rate is $1.166 per euro,the dollar interest rate is 10%,and the euro interest rate is 5%?

• A)10%
• B)11%
• C)-1%
• D)0%
• E)15%

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Definitions:

Direct Materials

Raw materials that can be directly traced to the production of specific goods or services.

Direct Labor-Hours

The sum of hours contributed by personnel directly employed in the process of manufacturing.

Variable Overhead

Costs that fluctuate with the level of production activity, such as utilities or raw materials.

Direct Material

Basic substances that are directly used and can be readily identified in the final product.