Question
Can someone help explain this in detail? I do not know how to explain it. Part 1)Explicate the reason a currency appreciation (depreciation) increases (decreases)
Can someone help explain this in detail? I do not know how to explain it.
Part 1)Explicate the reason a currency appreciation (depreciation) increases (decreases) the profitability of a foreign investment, ceteris paribus. Direct your explication to the conversion of debt payment (principal and interest) and dividends from the foreign currency, let us say, ringgit to dollars. Everything else presuppose remains constant.
Part 2. How would the results of problem one alter, if we additionally had sales from India to China,
and the renminbi revalued against the rupee by 10% yearly for the next 6 years? Presuppose the volume of sales in China are double what they are in India in the beginning. Also, presuppose the price elasticity of demand is - 3 for the product in China. Presuppose secondly the expenses are incurred in rupees.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started