Which of the following operations benefit(s) from depreciation of the firm's local currency?
A) borrowing in a foreign country and converting the funds to the local currency prior to the depreciation
B) purchasing foreign supplies
C) investing in foreign bank accounts denominated in foreign currencies prior to depreciation of the local currency
D) borrowing in a foreign country and converting the funds to the local currency prior to the depreciation AND purchasing foreign supplies

Question

Quizplus · Accepted Answer

Investing in foreign bank accounts denominated in foreign currencies prior to the depreciation of the local currency can benefit from the depreciation as the return on investment will increase when deposited funds are converted back to the depreciated local currency. The other options involve either borrowing or purchasing, which could become more expensive with currency depreciation.

Which of the Following Operations Benefit(s) from Depreciation of the Firm's