If the Rate of Return Is 3 Percent in Mexico

question 83

Multiple Choice

If the rate of return is 3 percent in Mexico and 1 percent in Canada, the

• A) law of one price predicts a single international rate of return between 3 percent and 1 percent.
• B) Mexican peso is expected to depreciate against the Canadian dollar by 2 percent.
• C) Mexican peso is expected to appreciate against the Canadian dollar by 2 percent.
• D) rate of return in Mexico is expected to fall to 1 percent.
• E) rate of return in Canada is expected to rise to 3 percent.

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Definitions:

Dividends Account

An account used in accounting to track distributions of earnings paid to shareholders.

Salary Expense Account

An account recording the total amount paid to employees for services rendered during a specific period, before any deductions.

Credit Entries

Entries made in the accounting records that increase liabilities or decrease assets.

Expense Account

An account specifically used to track expenditures related to specific activities, projects, or operations.