Assume That an American Company Today Invests Some of Its

question 72

Multiple Choice

Assume that an American company today invests some of its spare cash in a Hungarian money market account that will earn 8 percent for a period of two months. Which of the following, if it happens during the next two months, would imply that the company will earn less than 8 percent on its investment?

• A) The Hungarian forint rises in value against the dollar.
• B) Interest rates in the United States move down.
• C) Short-term interest rates in Hungarian money markets shoot up.
• D) The dollar appreciates against the Hungarian forint.

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Definitions:

Security Prices

The market price at which a financial security is traded.

Risk Level

The degree of uncertainty associated with the potential for loss or undesirable outcomes in an activity or decision.

Market Efficiency

A condition in financial markets where prices fully reflect all available information, leading to assets being priced accurately and trades being executed fairly.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.