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21 July, 09:47

1. Interest expense on a loan denominated in another currency is converted at: A. The forward rate for delivery when the interest must be paid B. The spot rate when the loan was made C. The spot rate when the interest is accrued D. The average spot rate for the period the interest covers

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  1. 21 July, 10:15
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    The correct answer is letter "C": The spot rate when the interest is accrued.

    Explanation:

    The Spot Rate is the immediate selling price on the acquisition of goods, currency, and securities. The spot rate is the market price at the time of the quote. The markets in which spot rates are calculated are fluid and competitive. Spot rates adjust as much as the demand rises and falls.

    Therefore, interest expense on a loan denominated in a foreign currency is translated to the spot rate ar the moment when the interest rate is accrued.
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Home » Business » 1. Interest expense on a loan denominated in another currency is converted at: A. The forward rate for delivery when the interest must be paid B. The spot rate when the loan was made C. The spot rate when the interest is accrued D.
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