If the Domestic Dollar Return (Home Nominal Interest Rate) Is

question 118

Multiple Choice

If the domestic dollar return (home nominal interest rate) is 5%, and the foreign nominal interest rate is 3%, and there is no expected change in future exchange rates, then as the spot exchange rate depreciates:

• A) the foreign return rises.
• B) the foreign return falls.
• C) the domestic return rises.
• D) the domestic return falls.

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