If Foreign Exchange Rates Are Determined by the Interaction of Supply

question 179

Multiple Choice

If foreign exchange rates are determined by the interaction of supply and demand forces for the various currencies, then the exchange rate is:

• A) fixed.
• B) government-determined.
• C) set by the value of gold.
• D) floating.
• E) improper.

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Definitions:

Residual Income

Income that remains after all costs of capital have been deducted from net operating income, a measure of profitability.

Division

A distinct part of a larger company that operates semi-independently, typically focusing on a particular product line or market sector.

ROI Calculations

The process of determining the return on investment by dividing the net profit by the initial cost of the investment.

Margin

The difference between the selling price of a good or service and the cost of producing it, often expressed as a percentage of the selling price.