Suppose That Initially We Have an Exchange Rate of 130

question 15

Multiple Choice

Suppose that initially we have an exchange rate of 130 yen to the dollar.Suddenly trouble develops in the Japanese stock market,making American stocks more attractive than before.We expect that the dollar will ________ against the yen,meaning that it will cost ________ than 130 yen.

• A)depreciate,more
• B)depreciate,less
• C)appreciate,more
• D)appreciate,less

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Definitions:

Accounts Receivable

Funds owed to a company by customers for products or services that have been delivered or used but not yet paid for.

Equity Multiplier

This financial ratio measures a company’s total assets financed by stockholders, indicating the leverage level relative to equity.

Debt-Equity Ratio

A measure of a company's financial leverage, calculated by dividing total liabilities by shareholders' equity.

Return On Equity

An indicator of how effectively a company uses investor funds to produce profit growth, determined by dividing the net income by the equity of shareholders.