If an MNC invests excess cash in a foreign county, it would like the foreign currency to ____; if an MNC issues bonds denominated in a foreign currency, it would like the foreign currency to ____.
A) appreciate; depreciate
B) appreciate; appreciate
C) depreciate; depreciate
D) depreciate; appreciate

Question

Quizplus · Accepted Answer

If an MNC invests excess cash in a foreign country, it would like the foreign currency to appreciate because this would result in higher returns when the investment is converted back into the MNC's home currency. On the other hand, if an MNC issues bonds denominated in a foreign currency, it would like the foreign currency to depreciate because it would reduce the amount of principal and interest payments in the MNC's home currency.

If an MNC Invests Excess Cash in a Foreign County