The Exchange Rate Policy of a "Crawling Peg" Adopted by the Chinese

question 51

Multiple Choice

The exchange rate policy of a "crawling peg" adopted by the Chinese government in 2005 means that the government

• A)allowed small and controlled changes in the exchange-rate value over time.
• B)pegged the Yuan to the U.S.dollar at the equilibrium exchange rate.
• C)held a balanced portfolio of assets including a variety of foreign currencies.
• D)caved in to pressures from foreign governments.

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Definitions:

Profitability Index

A financial metric that measures the relative profitability of an investment by dividing the present value of future cash flows by the initial investment cost.

Present Value

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Net Cash Flows

The difference between a company's cash inflows and outflows over a specific period.

Accounting Rate

Typically refers to the rate of return or interest rate used in financial calculations, such as net present value or internal rate of return.