Solution:
If we believe that dollar will depreciate against the Japanese yen and appreciate against the Argentina Peso this mean that more dollars can be bought now with the same amount of yen. Generally done to boost exports and to get higher foreign currency in the country.
Currency appreciation on the other hand would mean that dollar has become expensive or Pesso has become cheaper for the same amount of dollars and hence for the same amount of peso we will be getting lesser number of dollars.
Eg: if the exchange rate if 100 Yen = 1 Dollar and in future the anticipated rate is 80 yen = 1 Dollar i.e. we can now buy a dollar with 80 yen.
In converting the price of a Japanese ADR into dollars we divide the amount by 100 or 80 i.e. the denominator is the Yen/dollar rate and as it will decrease the dollar price would increase and reverse in the case of Argentina peso.
Option A: The exchange rate will decrease the dollar price of the Japanese ADR and Increase the dollar price for Peso. As discussed its the other way around.
Option B: Again an incorrect option
Option C: Correct Option i.e. the dollar price of the Japanese ADR would increase with dollar depreciating and dollar price for peso would decrease.
Option D: Again an incorrect option.
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