Suppose an individual firm is comparing two investments, a one year bond from a U.S. firm paying 4% or a one year bond from a German firm which is paying 6%. The current dollars-per-euro rate is 0.75, and the expected rate in one year is 0.72
If the expected rate is correct, which investment will receive the higher return? A) The U.S. Bond
B) The German Bond
C) They will have the same return.
D) This cannot be determined from the information given.
A
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Which of the following is an important goal of the price index?
a. to show current GDP in dollars of inflated purchasing power b. to show current GDP in physical units of inflated purchasing power c. to show real GDP in dollars of constant purchasing power d. to show real GDP in physical units of constant purchasing power
Mark has $2000 saved for a trip at Spring Break. Over Winter Break, he decide to buy gifts for his family and puts over $500 on his credit card which charges 10% interest on the outstanding balance every month. He pays off the credit card bill gradually over the next two months. An economist would categorize that behavior as:
A. misallocated. B. rational. C. irrational. D. scarce.