14-95 What Must Be the Forward Exchange Rate to Eliminate

question 45

Multiple Choice

14-95 What must be the forward exchange rate to eliminate the preference for the yen loans?

• A)$0.6416/¥.
• B)$0.5798/¥.
• C)$0.6118/¥.
• D)$0.5991/¥.
• E)Insufficient information.

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Definitions:

Payables

Financial obligations or amounts owed by a business to its suppliers or creditors for goods and services received.

Firm's Cash Cycle

The time period it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Investments In Inventory

Funds allocated towards purchasing goods for sale or raw materials to produce goods, aiming at generating future revenues.

Restrictive Policy

A policy designed to limit or restrict certain behaviors, actions, or practices, typically in a financial or regulatory context.