If the Interest Rate in Two Countries Were the Same

question 95

Multiple Choice

If the interest rate in two countries were the same, you would prefer 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:

Fair Value

Fair value is the estimated price at which an asset or liability could be traded in a fair and open market transaction, reflecting its current market value.

Cost Base

The total amount of investment in an asset, used for tax purposes to determine capital gains or losses upon disposal.

Long-Lived Asset

Assets of a company that provide value for more than one fiscal year, such as buildings, machinery, and equipment.

Capitalized

The process of recording a cost as an asset, rather than an expense, enabling the cost to be expensed over the useful life of the asset rather than immediately at the time of purchase.