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-foe example, political risk and exchange rate risk. Several factors affect the exchange rate of a currency with another currency. Which of the following statements arc true about the factors that have an impact on exchange rates' Check all that apply. square If the demand for a currency increases, the currency's value will increase relative to other currencies. square If a government intends to prevent Its currency's value from falling relative to other currencies, it will purchase its currency from sellers in the market. square An increase in inflation tends to increase the currency's value with respect to other currencies with lower inflation. square When a government limits imports and restricts foreign exchange transactions, its currency's value tends to increase relative to other currencies. The relationship between interest rates and exchange rates can be represented through the concept of interest rate panty. Consider the following: Suppose you observe the following spot and forward exchange rates between the U.S. dollar (dollar) and the Canadian dollar (C dollar): The current one-year interest rate on U.S. Treasury securities Is 7.35%. If interest rate panty holds, what is the expected yield on one-year Canadian securities of equal risk? SmallCircle 5.32% SmallCircle 4.48% SmallCircle 5.60% SmallCircle 4.76% Interest rate panty recognizes that when you invest in a country other than your home country, two factors affect your investment-returns on the investment itself and changes in the exchange rate. Which of the following would cause the overall return on your investment to be higher than the Investment's stated return? SmallCircle your home currency appreciates relative to the currency.n which the investment is denominated SmallCircle The currency in which the investment is denominated depreciates relative to your home currency. SmallCircle The currency in which the investment is denominated appreciates relative to your home currency. 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-foe example, political risk and exchange rate risk. Several factors affect the exchange rate of a currency with another currency. Which of the following statements arc true about the factors that have an impact on exchange rates' Check all that apply. square If the demand for a currency increases, the currency's value will increase relative to other currencies. square If a government intends to prevent Its currency's value from falling relative to other currencies, it will purchase its currency from sellers in the market. square An increase in inflation tends to increase the currency's value with respect to other currencies with lower inflation. square When a government limits imports and restricts foreign exchange transactions, its currency's value tends to increase relative to other currencies. The relationship between interest rates and exchange rates can be represented through the concept of interest rate panty. Consider the following: Suppose you observe the following spot and forward exchange rates between the U.S. dollar (dollar) and the Canadian dollar (C dollar): The current one-year interest rate on U.S. Treasury securities Is 7.35%. If interest rate panty holds, what is the expected yield on one-year Canadian securities of equal risk? SmallCircle 5.32% SmallCircle 4.48% SmallCircle 5.60% SmallCircle 4.76% Interest rate panty recognizes that when you invest in a country other than your home country, two factors affect your investment-returns on the investment itself and changes in the exchange rate. Which of the following would cause the overall return on your investment to be higher than the Investment's stated return? SmallCircle your home currency appreciates relative to the currency.n which the investment is denominated SmallCircle The currency in which the investment is denominated depreciates relative to your home currency. SmallCircle The currency in which the investment is denominated appreciates relative to your home currency
