What Conclusions Can You Make About the Degree of International

question 34

Multiple Choice

What conclusions can you make about the degree of international integration between the U.S.and Argentine markets?

• A)The markets are integrated since the PV of investing dollars today and converting them with a forward contract is significantly less than converting into Pesos today and investing those Pesos for six months.
• B)The markets are integrated since the PV of investing dollars today and converting them with a forward contract is significantly greater than converting into Pesos today and investing those Pesos for six months.
• C)The markets are integrated since the PV of investing dollars today and converting them with a forward contract is approximately equal to converting into Pesos today and investing those Pesos for six months.
• D)The markets are not integrated since the PV of investing dollars today and converting them with a forward contract is greater than converting into Pesos today and investing those Pesos for six months.

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Definitions:

Percent of Sales Method

A forecasting technique used to estimate various financial metrics, like expenses or inventory levels, as a percentage of sales revenue.

Realizable Value

An estimate of the amount for which an asset can be sold or a liability settled under current market conditions.

Expense Recognition

An accounting principle that dictates the timing of reporting an expense in the financial statements.

Dishonors

Refers to the failure to accept or pay a bill of exchange or promissory note when due.