Other things being equal, firms from a particular home country will engage in more international acquisitions if they expect foreign currencies toagainst their home currency, and if their cost of capital is relatively­­­. a. appreciate; low. b. appreciate; high. c. depreciate; high. d. depreciate; low.

A) appreciate; low.

Explanation:

If a company expects that a foreign currency will appreciate in the future, it might consider investing in that foreign country. The equation is fairly simple, if you invest $1,000 in Canada and expect your investment to yield 3% a year (which is not much) but you also expect the Canadian dollar to appreciate 10% against the dollar, then your investment will yield 13.3% which is relatively high.

That logic works as long as the cost of getting the money to invest is lower than the expected returns. Following the same example, if you can obtain a 7% credit and invest that money in Canada it would still be considered a good investment.

answercountries with higher real income per capita tend to have higher levels of this index.