If a Currency Decreases in Value in Response to Market

question 106

Multiple Choice

If a currency decreases in value in response to market forces, this process is known as

• A)devaluation.
• B)depreciation.
• C)deflation.
• D)degeneration.

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Definitions:

Convertible

A type of financial security that can be changed into a different form, most commonly a bond that can be converted into shares of the issuing company.

Promised Yield

The return an investor is told to expect from a bond or other fixed-income security, assuming it is held to maturity and all payments are made as scheduled.

Bond A

A financial security that represents a loan made by an investor to a borrower, typically corporate or governmental, which pays interest at predetermined intervals.

Hedging

A strategy used in finance to reduce the risk of adverse price movements in an asset, typically by taking an offsetting position in a related security.