If Asset Owners in Japan and Canada Consider Japanese and Canadian

question 217

Multiple Choice

If asset owners in Japan and Canada consider Japanese and Canadian assets as good substitutes for each other and if the Canadian interest rate is 5%,while the Japanese interest rate is 2%:

• A) financial inflows will reduce the Canadian interest rate.
• B) financial outflows will reduce the Japanese interest rate.
• C) the interest rate gap between Canada and Japan will grow.
• D) financial inflows will increase the Canadian interest rate.

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Definitions:

Deferred Tax Account

An account on a company’s balance sheet that is a provision for income taxes that have been accrued but are not yet due.

Unrealized Profits

Profits that have been earned but not yet realized through a transaction, such as an increase in value of an investment that has not been sold yet.

Inventory

the totality of goods and materials held by a company for the purpose of resale, manufacturing, or repair.

Consolidation

The act of merging several items into a single or unified whole, commonly used in contexts of financial accounting to unify financial documents.