For Ecuador,the Result of Adopting the Dollar as Its Official

question 104

Multiple Choice

For Ecuador,the result of adopting the dollar as its official currency is that

• A) its government cannot capture revenue (seigniorage) by issuing currency
• B) there tends to be greater promise of lower interest rates and greater financial stability
• C) the rate of inflation in Ecuador is tied to that of the United States
• D) all of the above

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Definitions:

Face Value

The nominal or dollar value printed on a bond, bill, or other financial instrument, representing the amount to be repaid at maturity.

Selling Premium

The amount by which the selling price of a bond exceeds its par value or face value.

Premium on Bonds Payable

The excess amount by which bonds are issued over their face value, representing an additional cost of borrowing to the issuer.

Amortization

The method of incrementally expensing the original value of an intangible asset throughout its operational life.