Assume Costner plc, a UK-based MNC, invests 2,500,000 Zambian kwacha (ZMK) for a one-year period at a nominal interest rate of 9 per cent. At the time the loan is extended, the spot rate of the kwacha is £0.00033. If the spot rate of the kwacha in one year is £0.00030, the pound amount initially invested in Zambia is £____, and £____ are paid out after one year.

Question

Quizplus · Accepted Answer

The correct answer is A because the pound amount initially invested in Zambia is £825 (2,500,000 ZMK * £0.00033) and £817 are paid out after one year (2,500,000 ZMK * £0.00030).

Assume Costner Plc, a UK-Based MNC, Invests 2,500,000 Zambian Kwacha