When the Value of One Currency Increases Relative to the Value

question 9

Multiple Choice

When the value of one currency increases relative to the value of another currency, the currency with increasing value has experienced:

• A) exchange rate depreciation.
• B) exchange rate appreciation.
• C) interest rate depreciation.
• D) exchange rate arbitrage.

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Definitions:

Greenmail

A situation where a company buys back its own shares from a potential acquirer at a higher price than the market value to prevent a hostile takeover.

Lock-Up Option

A contractual agreement where shareholders are prohibited from selling their shares for a specified period following an initial public offering (IPO).

Tender Offer

A tender offer is a proposal made by an entity to the shareholders of another company to purchase some or all of their shares at a specified price for a limited time.

Business Judgment Rule

A legal principle that protects company directors and officers when making business decisions that are informed and made in good faith.