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 diversity business risk. This multimarket presence exposes companies to different kinds of risk as well for sample, political risk and exchange rate risk The relationship between interest rates and exchange rates can be represented through the concept of interest rate parity. Consider the following Suppose you observe the following soot and forward exchange rates between the US dollar ($) and the Canadian dollar (C$) Canadian dollar (0.5. dollar Canadian dollar) Spot Exchange Rate 0.6976 One-Year Forward Exchange Rate 0.9023 The current one year interest rate on U.S.Tuy securities is 7.354. If interest rate party hold, what is the spected yield on one year Canadian ribes of equal 4.70 5.000 Management The current one-year interest rate on U.S. Treasury securities is 7.35%. If interest rate parity holds, what is the expected yield on one-year Canadian securities of equal risk? 4.76% 4.489 5.60% 6.16 Interest rate party 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 lower than the investment's stated return? Your home currency appreciates relative to the currency in which the investment is denominated The currency in which the investment is denominated appreciates relative to your home currency Your home currency depreciates relative to the currency in which the investment is denominated 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 diversity business risk. This multimarket presence exposes companies to different kinds of risk as well for sample, political risk and exchange rate risk The relationship between interest rates and exchange rates can be represented through the concept of interest rate parity. Consider the following Suppose you observe the following soot and forward exchange rates between the US dollar ($) and the Canadian dollar (C$) Canadian dollar (0.5. dollar Canadian dollar) Spot Exchange Rate 0.6976 One-Year Forward Exchange Rate 0.9023 The current one year interest rate on U.S.Tuy securities is 7.354. If interest rate party hold, what is the spected yield on one year Canadian ribes of equal 4.70 5.000 Management The current one-year interest rate on U.S. Treasury securities is 7.35%. If interest rate parity holds, what is the expected yield on one-year Canadian securities of equal risk? 4.76% 4.489 5.60% 6.16 Interest rate party 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 lower than the investment's stated return? Your home currency appreciates relative to the currency in which the investment is denominated The currency in which the investment is denominated appreciates relative to your home currency Your home currency depreciates relative to the currency in which the investment is denominated
