Demand for a Foreign Currency Is Generated By

question 28

Multiple Choice

Demand for a foreign currency is generated by:

• A)government policies.
• B)the sources from which the currency can be obtained.
• C)requirements of MNCs and foreign travel.
• D)events within the country whose currency is being considered.

---

Definitions:

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment by comparing the present value of its cash inflows to the present value of its cash outflows.

Payback Period

The amount of time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.

Discount Rate

The interest rate used to determine the present value of future cash flows, guiding investment and financing decisions by reflecting the opportunity cost of capital.

NPV

An abbreviation for Net Present Value, it assesses the worth of future cash flows in today's dollars, subtracting the initial investment.