The exchange rate is determined by the market forces of demand and supply
Hence, the correct statements are:
First, second and last
If demand increases, value increases
If government wants to prevent value, should purchase
Limiting import will increase value as value will be restricted
Increase in inflation will reduce value
Convert into yen 1,000*103.40 = Yen 103,400
Return after 4% = 103,400(1+4%) = 107,536
Convert at forward rate = 107,536/102.29 = $1,051.29
Annualised Return = [(1,051.29 – 1000)/1000]*360/90
= 20.52%
A is correct
An investment in one’s home country should have the same return as a similar investment in a foreign country.
5. Interest rate parity Aa Aa The rise of globalization is due to the many companies that have become multinational cor...
5. Interest rate parity Aa Aa E The rise of globalization is due to the many companies that have become multinational corporations for various reasons-for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well-for example, political risk and exchange rate risk. Several factors affect the exchange rate of a currency...
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4. Interest rate parity The rise of globalization is due to the many companies that have become multinational corporations for various reasons-for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well-for example, political risk and exchange rate risk. The relationship between interest rates and exchange rates can be represented through...
4. Interest rate parity Aa Aa E The rise of globalization is due to the many companies that have become multinational corporations for various reasons-for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well--for example, political risk and exchange rate risk. The relationship between interest rates and exchange rates can...
The rise of olobalization is due to the many companies that have become multinational corporations for various reasons-for example, to access betber technology, to enter new markets, to obtain more raw materlals, to find funding resources, to minimize production costs, or to diverssity business risk This multimarket presence exposes companies to dfferent kinds of risk as weli-for example, political risk and exchange rate risk The relationship between interest rates and exchange rates can be represented through the concept of interest...
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