Consider the Following Equation: S × [(Foreign Cash Flow)

question 80

Multiple Choice

Consider the following equation: S × [(Foreign Cash Flow) / (1 + r_FC] = (Forward Rate × Foreign Cash Flow) / (1 + r_$)
The term r_$ in this equation is ________.

• A) the dollar discount rate
• B) the risk-free rate for a foreign investor
• C) the risk-free rate for a U.S. investor
• D) the foreign currency discount rate

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