If the Rate of Return Is 3 Percent in Mexico

question 124

Multiple Choice

If the rate of return is 3 percent in Mexico and 8 percent in Canada, the

• A) law of one price predicts a single international rate of return between 3 percent and 8 percent.
• B) Mexican peso is expected to depreciate against the Canadian dollar by 5 percent.
• C) Mexican peso is expected to appreciate against the Canadian dollar by 5 percent.
• D) rate of return in Mexico is expected to rise to 8 percent.
• E) rate of return in Canada is expected to fall to 3 percent.

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Definitions:

Need

A requirement essential for an organism's survival or well-being, as well as a strong desire for something.

Want

A desire for something that is not necessarily needed but is desired for personal satisfaction or fulfillment.

Drive Theory

A psychological theory suggesting that motivation is driven by an organism's need to fulfill physiological needs in order to maintain homeostasis.

Gratification

The pleasure, satisfaction, or relief felt when a need, desire, or expectation is fulfilled.