Assume the UK Financing Rate Is 10 Per Cent and That

Multiple Choice

Assume the UK financing rate is 10 per cent and that the financing rate in Germany is 9 per cent. An MNC would be indifferent between financing in pounds and financing in euros next year if the euro is expected to ____.

A) appreciate by 0.92%
B) depreciate by 0.92%
C) appreciate by 1.00%
D) depreciate by 1.00%