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

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—for example, 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 spot and forward exchange rates between the U.S. dollar ($) and the Canadian dollar (C$):
 
Spot Exchange Rate
One-Year Forward
Exchange Rate
Canadian dollar (U.S. dollar/Canadian dollar) 0.8798 0.8935
 
The current one-year interest rate on U.S. Treasury securities is 8.03%. If interest rate parity holds, what is the expected yield on one-year Canadian securities of equal risk?
 
a. 5.73%
 
b. 6.37%
 
c. 6.69%
 
d. 7.01%
 
 
Interest rate parity 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?
 
a. currency in which the investment is denominated appreciates relative to your home currency.
 
b. Your home currency appreciates relative to the currency in which the investment is denominated.
 
c. Your home currency depreciates relative to the currency in which the investment is denominated.
Tired of numerous paper assignments?
Rely on us and receive professional paper writing assistance!
Professional paper Writing Assistance

Who We Are

We are a professional website for customized writing. If you searched a question and stumbled into our website, you are in the right place to receive assistance with your coursework.

Do you handle any type of coursework?

Yes. We have displayed prior orders to demonstrate our experience. We can answer this question for you as we have previously. Please fill out our Order Form so that we may ensure its flawlessness. Correctly completing the order form will help our staff with reference, requirements, and future communication.

Is it hard to Place an Order?

  1. Click on the “Order Now” tab at the top menu or “GET A FREE QUOTE” icon at the bottom and a new page will appear with an order form to be filled
  2. Fill in the initial requirements in the small order form located on the home page and press “continue” button to proceed to the main order form or press “order” button in the header menu. Starting from there let our system intuitively guide you through all steps of ordering process. Submit detailed paper instructions, upload necessary files if needed and provide your contact information – you are almost done!
  3. Proceed with the payment- click on “PROCEED TO CHECKOUT” at the bottom of the page. From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it. All your payments are processed securely through PayPal. This enables us to guarantee a 100% security of your funds and process payments swiftly.
  4. Delivery- Once finished, your final paper will be available for download through your personal dashboard. You will also receive an email notification with a copy of your paper attached to it.