For a US based investor, a weaker dollar means that overall dollar based returns on overseas security investment will be higher because

Question

Quizplus · Accepted Answer

A weaker dollar means that each unit of foreign currency can be exchanged for more dollars. Therefore, when an investor invests in a foreign security and receives returns in the foreign currency, those returns will translate to more dollars when the investor converts the foreign currency back to dollars. This results in higher overall dollar-based returns for the investor. Choices A, B, D are incorrect because they do not accurately describe the relationship between a weaker dollar and investments in foreign securities.

For a US Based Investor, a Weaker Dollar Means That