$11\mathrm{.}5$

B

I

u

A

C$)$

I$$

$3$ out of $3$ points

hong

Assume that you have a subsidiary in Australia. The subsidiary sells mobile homes to local consumers in Australia, who buy the homes using mostly borrowed funds from local banks. Your subsidiary purchases all of its materials from Hong Kong and pays Hong Kong dollar. The Hong Kong dollar is tied to the U$.$S$.$ dollar. Your subsidiary borrowed funds from the U$.$S$.$ parent, and must pay the parent $$100,000$ in interest each month. Australia has just raised its interest rate in order to boost the value of its currency $($Australian dollar$).$

The subsidiary's cost of purchasing materials measured in Australian dollar will

Selected Answer: B$.$ decrease

Answers: A$.$ increase

OB decrease

C$.$ not change

hong

Assume that you have a subsidiary in Australia. The subsidiary sells mobile homes to local consumers in Australia, who buy the homes using mostly borrowed funds from local banks. Your subsidiary purchases all of its materials from Hong Kong and pays Hong Kong dollar. The Hong Kong dollar is tied to the U$.$S$.$ dollar. Your subsidiary borrowed funds from the U$.$S$.$ parent, and must pay the parent $$100,000$ in interest each month. Australia has just raised its interest rate in order to boost the value of its currency $($Australian dollar$).$

The subsidiary's cost of purchasing materials measured in Australian dollar will