Severe Fiscal Imbalances Can Directly Trigger a Currency Crisis Since

question 18

Multiple Choice

Severe fiscal imbalances can directly trigger a currency crisis since

• A)investors fear that the government may not be able to pay back the debt and so begin to sell domestic currency.
• B)the government may stop printing money.
• C)the government may have to cut back on spending.
• D)the currency must surely increase in value.

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Definitions:

Bond's Price

The market price at which a bond is currently trading. This price can fluctuate based on interest rates, the bond's credit rating, and other factors.

Future Cash Flows

Estimated future financial earnings or expenditures, often used in investment analysis to determine value or profitability.

Coupon Rate

The annual interest rate paid by a bond relative to its face value, representing the yield an investor is expected to earn if the bond is held to maturity.

Yield to Maturity

The total return anticipated on a bond if it is held until its maturity date, considering all interest payments and principal repayment.