The Figure Given Below Depicts the Foreign Exchange Market for British

question 87

Multiple Choice

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2

-Suppose you are a U.S. exporter expecting to receive a payment of NZD1,000 (New Zealand dollars) in 12 months. The annual interest rate on NZD deposits is 5 percent, and the annual interest rate on dollar deposits is 9 percent. If the present exchange rate is $0.50 per NZD and interest rate parity holds, how many dollars do you expect to receive at the maturity date of the export contract?

• A)$2,000
• B)$1,923
• C)$1,000
• D)$580
• E)$520

---

Definitions:

Diet

The total of food consumed by a person or other organism, often referring specifically to a planned regimen of eating and drinking for health or weight-management reasons.

Salt Deficiency

A condition resulting from insufficient amounts of sodium in the blood, which can lead to symptoms like headache, nausea, and fatigue.

Salty Tastes

Pertains to one of the basic tastes, recognized by the presence of sodium ions, typically experienced from eating foods with salt.

Sweet Tastes

One of the basic tastes, perceived by the taste buds on the tongue, often associated with foods rich in sugars.