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
You might also like to view...
Consider an economy with a particular distribution of income. Over the next 10 years, the income of all households increases by $20,000. How will the Gini coefficient change over those 10 years?
A. The Gini coefficient will decrease. B. The Gini coefficient will increase. C. The Gini coefficient will become more negative. D. The Gini coefficient will stay the same as all households received the same increase in income. E. It is impossible to determine how the Gini coefficient will change as it will depend on the original income distribution.
Product % Change in Income % Change in Quantity Demanded W -1 -1 X +6 +3 Y -1 +1 Z +4 +8 Refer to the above table. Which product is a normal good but least responsive to a change in income?
A. Product W B. Product Z C. Product Y D. Product X
A proprietorship is a business
A) with annual sales below $100,000. B) in which the stock of the company is closely held by members of one family. C) which produces a service rather than goods. D) owned by one individual who is responsible legally for the debts of the firm.
A tax cut shifts the aggregate demand curve the farthest if
a. the MPC is large and if the tax cut is permanent. b. the MPC is large and if the tax cut is temporary. c. the MPC is small and if the tax cut is permanent. d. the MPC is small and if the tax cut is temporary.