Which of the Following Is Correct with Respect to Exchange

question 164

Multiple Choice

Which of the following is correct with respect to exchange rates?

• A) The value of one country's currency relative to another varies with changes in GDP, but not as a response to market conditions.
• B) The value of the Canadian dollar falls as the foreign demand for Canadian goods rises.
• C) Exchange rates typically fluctuate by very small amounts on a daily basis.
• D) Fluctuation in exchange rates have little impact on the balance of trade.
• E) All of these are correct.

---

Definitions:

Face Value

The nominal or dollar value printed on a security or bond, representing the amount that will be paid back at maturity, not including interest.

Coupon Rate

The interest rate a bond pays each year, shown as a percentage of its face value.

Yield To Maturity

The total return expected on a bond if it is held until the date it matures, including both interest payments and the difference between the bond's current market price and its face value.

Semi-Annually

Occurring or calculated twice a year, typically every six months.