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:

Financial Statements

Official records outlining the financial activities and condition of a business or entity, including the balance sheet, income statement, and cash flow statement.

Common Shares

Equity ownership units in a corporation that entitle holders to voting rights and potential dividends.

Return On Equity Ratio

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how well a company uses investments to generate earnings growth.

Financial Statements

Official records that outline the financial activities and condition of a business, individual, or other entity, typically including the balance sheet, income statement, and cash flow statement.