Exhibit 20-1 Assume a U.S.-Based MNC Is Borrowing Romanian Leu (ROL) at (ROL)

question 28

Multiple Choice

Exhibit 20-1
Assume a U.S.-based MNC is borrowing Romanian leu (ROL) at an interest rate of 8% for one year. Also assume that the spot rate of the leu is $.00012 and the one-year forward rate of the leu is $.00010. The expected spot rate of the leu one-year from now is $.00011.
-Refer to Exhibit 20-1. What is the effective financing rate for the MNC assuming it borrows leu on a covered basis?

• A)10%.
• B)-10%.
• C)-1%.
• D)1%.
• E)none of the above

Interpret survey data to determine probabilities involving overlapping sets.

Calculate the probability of an event occurring given the probability of two or more other interrelated events.

Understand concepts of intersection and union in the context of probability.

Apply the concept of conditional probability to determine specific probabilities.

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Definitions:

Prejudice

A preconceived opinion or feeling, often negative, about a group or individual based on stereotypes rather than actual knowledge or reason.

Outgroup Members

Individuals who are perceived as not belonging to one's own group, often leading to biases and discrimination.

Team Assignments

Tasks or projects assigned to a group of individuals for collaborative work, aiming to pool skills, knowledge, and efforts.

Contact Hypothesis

A theory suggesting that under certain conditions, interpersonal contact is one of the most effective ways to reduce prejudice between majority and minority group members.