euros and earn 4 percent on a one-year bank deposit in France. If the exchange rate is initially 0.90 euros per dollar and then changes to 0.89 euros per dollar in one-year, which deposit would have given him a higher return?
euros and earn 4 percent on a one-year bank deposit in France. If the exchange rate is initially 0.90 euros per dollar and then changes to 0.89 euros per dollar in one-year, which deposit would have given him a higher return?
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter6: Managing In The Global Economy
Section: Chapter Questions
Problem 12E
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Question
![A Palestinian resident can earn 3 percent interest
on a one-year bank deposit of $50,000 at home.
Alternatively, he can convert the $50,000 into
euros and earn 4 percent on a one-year bank
deposit in France. If the exchange rate is initially
0.90 euros per dollar and then changes to 0.89
euros per dollar in one-year, which deposit would
have given him a higher return?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe55ace70-bad1-4608-aef1-9d5e401cf1e7%2F7415f36e-e7b1-44a1-a054-66ae621e77cc%2Fa59khrw_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A Palestinian resident can earn 3 percent interest
on a one-year bank deposit of $50,000 at home.
Alternatively, he can convert the $50,000 into
euros and earn 4 percent on a one-year bank
deposit in France. If the exchange rate is initially
0.90 euros per dollar and then changes to 0.89
euros per dollar in one-year, which deposit would
have given him a higher return?
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