When Short-Term Interest Rates Become Lower in Tokyo Than in New

question 97

Multiple Choice

When short-term interest rates become lower in Tokyo than in New York, interest arbitrage operations will most likely result in a(n)

• A) increase in the spot price of the yen.
• B) increase in the forward price of the dollar.
• C) sale of dollars in the forward market.
• D) purchase of yen in the spot market.

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Definitions:

Accumulated Depreciation

The total depreciation for a fixed asset that has been charged to expense since the asset was acquired and put into use.

Fixed Asset

Long-term tangible assets used in the operations of a business that are not expected to be converted to cash in the short term.

Book Value

The net value of an asset or company, calculated by subtracting liabilities from assets and often used to assess the worth of tangible assets on balance sheets.

Depreciable Asset

An asset subject to depreciation, representing its decline in value over time due to use or obsolescence.