Export Demand Shocks Is Likely to Be Least Disruptive to a Country

question 30

Multiple Choice

Export demand shocks is likely to be least disruptive to a country with:

• A)a floating exchange-rate system.
• B)a fixed exchange-rate system with sterilization.
• C)a fixed exchange-rate system without sterilization.
• D)a deficit in the current account.

---

Definitions:

Call Premium

The additional amount above the bond's face value that must be paid to redeem it before its maturity date.

Intrinsic Value

The actual, inherent value of a financial asset, determined through fundamental analysis without reference to its market value.

Strike Price

The pre-determined price at which the holder of an option can buy (call option) or sell (put option) the underlying asset.

Call Premium

The amount by which the call price of a bond or other security exceeds its face value, often applicable when the security is called before maturity.