U$.$S$.-$based MNCs commonly invest in foreign securities$.$

Assume that the dollar is presently strong and is expected to weaken over time. How will these expectations affect the tendency of U$.$S$.$ investors to invest in foreign securities$?$

The U$.$S$.$ investors would invest

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abroad if the dollar is expected to weaken. If the dollar is relatively strong now, U$.$S$.$ investors need

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dollars to make purchase foreign currency $($when investing$).$ If the dollar weakens over their investment horizon, the exchange rate effect would

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the yield that they earn on their investment.

Explain how high U$.$S$.$ interest rates can affect the tendency of U$.$S$.-$based MNCs to invest abroad.

High U$.$S$.$ interest rates can

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the tendency of U$.$S$.-$based MNCs to invest abroad, as investors seek higher returns on their investment.