If the Interest Rates Available on Investments in Two Countries

question 68

Multiple Choice

If the interest rates available on investments in two countries were the same, you would be less likely to invest in assets of the country:

• A)​whose currency was likely to appreciate.
• B)​whose currency was likely to depreciate.
• C)​whose currency had the greatest exchange value.
• D)​none of the above; it would not matter what was likely to happen to a country's currency exchange rate.

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Definitions:

Sure Payment

A guaranteed payment or financial transaction where the receiver has complete certainty of receiving the specified amount.

Lottery

A form of gambling involving the drawing of numbers for a prize, often used as a method to allocate scarce resources such as green cards or in decision theory as a risk model.

Probability

A measure of the likelihood that an event will occur, quantified as a number between 0 and 1.

Utility

A concept in economics that measures the satisfaction, happiness, or benefit that results from the consumption of goods and services.