If the Risk of Holding Assets in Foreign Countries Rises

question 166

Multiple Choice

If the risk of holding assets in foreign countries rises relative to the risk of holding U.S assets,then

• A)U.S.net capital outflow rises which increases the U.S.exchange rate.
• B)U.S.net capital outflow rises which decreases the U.S.exchange rate.
• C)U.S.net capital outflow falls which increases the U.S.exchange rate.
• D)U.S.net capital outflow falls which decreases the U.S.exchange rate.

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Definitions:

Goal Congruence

A condition in which the goals of the company's various employees and departments align with the overall objectives of the organization.

Motivation

The internal and external factors that stimulate desire and energy in people to be continually interested and committed to a job or subject.

Suboptimal Decision

A choice made that is not the best or most effective among the alternatives considered.

Transfer Pricing

The setting of prices for transactions between affiliated companies within the same multinational group, which can impact where profits are reported.