Assume That There Are Several Foreign Currencies That Exhibit a Higher

question 11

Multiple Choice

Assume that there are several foreign currencies that exhibit a higher interest rate than the U.S. interest rate. The U.S. firm has a higher probability of generating a higher effective yield on a portfolio of currencies (relative to the domestic yield) if:​

• A)the foreign currency movements against the U.S. dollar are highly correlated.
• B)the foreign currency movements against the U.S. dollar are perfectly positively correlated.
• C)the foreign currency movements against the U.S. dollar exhibit low correlations.
• D)none of the answers above would have any impact on the probability of a foreign cash investment generating a higher effective yield than a U.S. investment.

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Definitions:

Attitudes

Psychological tendencies expressed by evaluating a particular entity with some degree of favor or disfavor.

Perceptions

The way individuals interpret and understand the world around them, influenced by their experiences, beliefs, and biases.

Agenda-Setting Theory

A communications theory proposing that the media has the power to influence the public's perception of what is important by choosing which topics to highlight.

Gatekeepers

Individuals or organizations that control access to information or resources, acting as intermediaries who can allow or block passage.