Assume That the Interest Parity Holds and That the Dollar

question 56

Multiple Choice

Assume that the interest parity holds and that the dollar is expected to appreciate against the pound.Given this information,we know that

• A)U)S. and U.K. interest rates are equal.
• B)the U.S. interest rate exceeds the U.K. interest rate.
• C)the U.K. interest rate exceeds the U.S. interest rate.
• D)individuals will prefer to hold U.S. bonds because the U.S. interest rate exceeds the U.K. interest rate.
• E) none of the above

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Definitions:

Fixed Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs, attributed to the variance in the volume of production.

Fixed Component

A cost or part of a cost that remains unchanged regardless of changes in the level of output or activity.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products or job orders based on a specific activity measure, like labor hours or machine hours.

Machine-Hours

A measure of production activity that quantifies the number of hours machines are operated in the production process.