Assume US Interest Rates Are Significantly Higher Than German Rates

question 51

Multiple Choice

Assume U.S. interest rates are significantly higher than German rates. A U.S. firm with a German subsidiary could achieve a lower financing rate without exchange rate risk by denominating thebonds in

• A) dollars.
• B) euros and making payments from U.S. headquarters.
• C) euros and making payments from its German subsidiary.
• D) dollars and making payments from its German subsidiary.

---

Definitions:

Hypnosis

A trance-like state of focused attention and heightened suggestibility, often used for therapeutic purposes.

Anesthetizing

The process of administering drugs to induce a state of temporary insensitivity to pain.

Childbirth

The process of giving birth to a baby, involving labor and delivery, which can occur through natural or medical interventions.

Activation-synthesis Theory

A theory suggesting that dreams are the result of the brain's attempt to make sense of neural activity that occurs during sleep.