If a Foreign Currency Consistently Depreciated Against the Dollar Over

question 16

Multiple Choice

If a foreign currency consistently depreciated against the dollar over several periods and had lower interest rates at the beginning of those periods than the U.S. interest rates, then:

• A) U.S. firms could have achieved a higher effective yield on foreign deposits than on U.S. deposits during those periods.
• B) the international Fisher effect is supported by the results.
• C) U.S. firms could have achieved a higher effective yield on foreign deposits than on U.S. deposits during those periods AND the international Fisher effect is supported by the results.
• D) None of these are correct.

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Definitions:

Market Breadth

An indicator used to gauge the overall direction of the stock market by analyzing the number of companies advancing versus those declining.

Advancing Stocks

Shares that have increased in price during a specific trading session, indicating positive market sentiment.

Declining Stocks

Stocks whose price has decreased over a specific period.

Market Breadth

A measurement of how many stocks are participating in the movement of a market or index, indicating the overall health and direction of the market.