When evaluating the financial investments in the home country and a foreign country, investors generally consider
A) labor productivity levels and rates of technological development.
B) budget surpluses or deficits of the home country and foreign country.
C) domestic and foreign interest rates and expected fluctuations in the exchange rate.
D) domestic and foreign price levels and the expected fluctuations in the exchange rate.

Question

Quizplus · Accepted Answer

When evaluating financial investments in the home country and a foreign country, investors generally consider domestic and foreign interest rates and expected fluctuations in the exchange rate. These factors can affect the return on investment and the value of the investment in the future. Labor productivity levels and rates of technological development (A) may be factors to consider for long-term investments, but they are not the primary factors for evaluating financial investments. Budget surpluses or deficits of the home country and foreign country (B) may have an impact on the exchange rate and interest rates, but they are not the primary factors for evaluating financial investments. Domestic and foreign price levels and expected fluctuations in the exchange rate (D) may play a role in evaluating investments, but interest rates and exchange rates are typically the primary factors.

When Evaluating the Financial Investments in the Home Country and a Foreign