In regards to the perspective of a U.S. investor, which of the below statements is FALSE?
A) The cash flows of assets denominated in a foreign currency expose the investor to uncertainty as to the actual level of the cash flow measured in U.S. dollars.
B) The actual number of U.S. dollars that the investor eventually gets depends on the exchange rate between the U.S. dollar and the foreign currency at the time the nondollar cash flow is received and exchanged for U.S. dollars.
C) If the foreign currency depreciates (declines in value) relative to the U.S. dollar (that is, the U.S. dollar appreciates) , the dollar value of the cash flows will be proportionately less, leading to foreign exchange risk.
D) The cash flows of assets denominated in a foreign currency expose the investor to uncertainty as to the actual level of the cash flow measured in that foreign currency.
Correct Answer:
Verified
Q1: Foreign-exchange risk _.
A) is the risk that
Q3: The exchange rate between the U.S. dollar
Q4: The countries of the European Union electing
Q5: A _ is the number of units
Q6: Given a direct quote, we can obtain
Q7: Which of the below statements is TRUE?
A)
Q8: The _ is the market for settlement
Q9: The birth of the euro on January
Q10: The fundamental fact of international finance is
Q11: In general, an exchange rate is defined
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