Assume That the Interest Rate on Borrowings in India Is

question 121

Multiple Choice

Assume that the interest rate on borrowings in India is 1 percent while the interest rate on bank deposits in a U.S.bank is 6 percent.John,an active currency trader borrows in Japanese yen,converts the money into U.S.dollars and deposits it in a U.S.bank.The speculative element of John's carry trade is that its success is based upon his belief that

• A)there will be no adverse movement in exchange rates or interest rates.
• B)liquidity is the key factor in determining interest rates.
• C)increasing money supply will not drive inflation.
• D)spot exchange rates are more favorable than forward exchange rates.
• E)hedging insures a company against foreign exchange risks.

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Definitions:

Strategic Farsightedness

The ability of an organization to look beyond immediate challenges and plan for long-term opportunities and risks.

Flexible Structure

An organizational framework that can quickly adapt to changes in the environment, allowing for innovation, scalability, and responsiveness.

Management Team

A group of individuals who work together to manage an organization, make strategic decisions, and ensure the company achieves its goals.

Management Synergy

When combined management efforts result in a performance greater than the sum of their individual effects, leading to increased efficiency and productivity.