In equilibrium, expected cash flow to amortize international debt obligations should reflect the ________.
A) current spot rate
B) the spot rate when the loan was contracted
C) the international Fisher effect
D) none of the above

Question

Quizplus · Accepted Answer

The international Fisher effect suggests that differences in nominal interest rates between countries are indicative of expected changes in exchange rates, which would affect the expected cash flow to amortize international debt obligations.

In Equilibrium, Expected Cash Flow to Amortize International Debt Obligations