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The rate of return on the foreign deposit is related to changes in the foreign interest rate and the and _ related to the spot
- The rate of return on the foreign deposit is related to changes in the foreign interest rate and the and _ related to the spot foreign currency value. The rate of return on the foreign deposit is positively related to changes in the foreign interest rate and the expected foreign currency value and negatively related to the spot foreign currency value.
- negatively; expected domestic currency value; positively
- positively; expected foreign currency value; negatively
- negatively; expected foreign currency value; negatively
- positively; expected domestic inflation rate; negativel
- If E$/ = 1.6, and Ee$/ in a years time is 1.75, then the return from the appreciation of the pound is 9.4 percent approximately.
- True
- False
- According to the market size hypothesis, capital flow from countries with low rates of return to those with high rates of return until equality is realized.
-
- True
- False
- According to the interest rate parity theory interest rates must equalize across countries when the exchange rates are floating.
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- False
- True
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