Assume that interest rates of most industrialized countries are similar to the U. S. interest rate. In the last few months, the currencies of all industrialized countries weakened substantially against the U. S. dollar. If non-U. S. firms based in these foreign countries financed with U. S. dollars during this period (even when they had no receivables in dollars), their effective financing rate would have been:

Question

Lilliana Hoffman

Business

21 April, 19:14

Assume that interest rates of most industrialized countries are similar to the U. S. interest rate. In the last few months, the currencies of all industrialized countries weakened substantially against the U. S. dollar. If non-U. S. firms based in these foreign countries financed with U. S. dollars during this period (even when they had no receivables in dollars), their effective financing rate would have been:

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Gavin Combs · Answer 1

lower than the interest rate of their respective countries.

Explanation:

The developing countries are always prone or used to having a low level of saving and a higher inflation, and these factors makes their various interest rates in their respective countries to be relatively high. The interest rate in Japan is more or less low most of the time compared to other countries for the reason that the very high rate of saving by households gives room for a great supply of funds to be channeled to borrowers.