In the international context, the effective interest rate equals to the nominal rate plus (or minus) any forecast appreciation (or depreciation) of a foreign currency relative to the currency of the MNC parent.

Question

Quizplus · Accepted Answer

This statement is true. The effective interest rate takes into account any expected changes in the exchange rate between currencies, which can have an impact on the actual return received by the MNC parent.

In the International Context, the Effective Interest Rate Equals to the Nominal