The effective yield of investing in a foreign currency depends on both the ____ and the ____ of the foreign currency.

Question

​The effective yield of investing in a foreign currency depends on both the ____ and the ____ of the foreign currency.

Quizplus · Accepted Answer

The effective yield, or return, on investing in a foreign currency depends on both the interest rate of that currency and the movements of the exchange rate between that currency and the investor's home currency. Inflation rate and income level may impact the overall economic environment, but they do not directly affect the yield of the investment in the foreign currency. The amount invested is also important, but it does not impact the yield itself, only the overall return.

​The Effective Yield of Investing in a Foreign Currency Depends

The Effective Yield of Investing in a Foreign Currency Depends