With internationally integrated capital markets the value of an investment depends on the currency used in the analysis.

Question

Quizplus · Accepted Answer

The value of an investment in internationally integrated capital markets should be independent of the currency used in the analysis because the underlying economic value of the investment does not change with the currency of measurement. Exchange rates adjust to reflect differences in inflation and interest rates between countries, ensuring that the value of an investment is consistent across currencies when markets are efficient.

With Internationally Integrated Capital Markets the Value of an Investment