If the foreign currency ____ by the time the acquirer makes payment, the acquisition will be more costly, and the cost of the acquisition changes ____ the change in the exchange rate.
A)appreciates; by a lesser percentage then
B)depreciates; in the same proportion as
C)appreciates; in the same proportion as
D)appreciates; by a greater percentage than

Question

Quizplus · Accepted Answer

If the foreign currency appreciates by the time the acquirer makes payment, the acquisition will indeed be more costly because the acquirer will have to spend more of their own currency to purchase the same amount of foreign currency. The cost of the acquisition changes in the same proportion as the change in the exchange rate because the direct relationship between the value of the foreign currency and the cost in the acquirer's currency.

If the Foreign Currency ____ by the Time the Acquirer