Consider the following equation:
S × [(Foreign Cash Flow) / (1 + rFC] = (Forward Rate × Foreign Cash Flow) / (1 + r$)
The term r$ in this equation is ________.
A) the dollar discount rate
B) the risk-free rate for a foreign investor
C) the risk-free rate for a U.S. investor
D) the foreign currency discount rate
Correct Answer:
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