Assume That Interest Rates of Most Industrialized Countries Are Similar

question 25

Multiple Choice

Assume that interest rates of most industrialized countries are similar to the U.S. interest rate. In the last few months, the currencies of all industrialized countries weakened substantially against the U.S. dollar. If non-U.S. firms based in these countries financed with U.S. dollars during this period (even when they had no receivables in dollars) , their effective financing rate would have been:

• A) negative.
• B) zero.
• C) positive, but lower than the interest rate of their respective countries.
• D) higher than the interest rate of their respective countries.

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Definitions:

Propinquity

The physical or psychological proximity between people, which influences their likelihood to form relationships or friendships.

Reciprocity

A mutual exchange of privileges or interactions between parties, often seen as a foundational principle in social relationships.

Dispositional Attributions

The tendency to attribute someone's behavior to their personal characteristics, rather than to situational factors.

Championing

Actively supporting or defending a cause, idea, or person.