If We Compare the Yield Curve in January, 1981 with the Yield

question 50

Multiple Choice

If we compare the yield curve in January, 1981 with the yield curve in January, 2013, we see that

• A)they are both downward-sloping, since both were years in which we had a recession
• B)they were both upward-sloping since both years had strong growth
• C)interest rates were expected to go up in 1981 due to high inflation
• D)interest rates were expected to go down in 2010 due to low inflation
• E)1981 was an unusual year, showing a downward-sloping yield curve

Comprehend the structure and function of foreign exchange markets.

Grasp the essentials of currency conversion and exchange rate quotations.

Identify the types of investments and operations multinational corporations (MNCs) engage in.

Recognize different ways a company can manage foreign exchange risk.

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Definitions:

Standard Markup Pricing

An approach to pricing in which a predetermined percentage is added on top of a product's cost to establish its market price.

Target Return-On-Sales Pricing

Setting a price to achieve a profit that is a specified percentage of the sales volume.

Bundle Pricing

A marketing strategy where multiple products or services are sold as a single combined package at a reduced price compared to buying each item individually.

Cost-Plus-Fixed-Fee Pricing

A pricing strategy where the seller charges the cost of production plus a fixed fee as profit.