The Benefit to Forecasting Exchange Rates

question 32

Multiple Choice

The benefit to forecasting exchange rates

• A)are greatest during periods of fixed exchange rates.
• B)are nonexistent now that the euro and dollar are the biggest game in town.
• C)accrue to, and are a vital concern for, MNCs formulating international sourcing, production, financing and marketing strategies.
• D)all of the above

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Definitions:

Effective Interest Rate

The rate at which invested capital grows over a period, taking into consideration the effect of compounding.

Amortizing

The process of gradually writing off the initial cost of an asset over a period, especially in the context of loan repayments or in spreading the cost of intangible assets.

Preferred Method

A favored or recommended approach or technique selected among various alternatives for its effectiveness or efficiency.

Convertible Bond

A type of bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.