If the U.S.demand for British Pounds Increases,then:​

question 6

Multiple Choice

If the U.S.demand for British pounds increases,then:​

• A)the dollar price of British pounds will increase.
• B)the dollar price of British pounds will decrease.
• C)the exchange rate between dollars and pounds will be less than the equilibrium exchange rate.
• D)the pound will fall in value vis-à-vis the dollar.
• E)there will be no change in either the value of the dollar or the pound.

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Definitions:

Put Bonds

Bonds that grant the holder the right to force the issuer to buy back the bond at a predetermined price before maturity.

Convertible

A financial security (for example, a bond or a preferred stock) that can be converted into a different form, often common stock.

Bonds

Debt securities issued by entities such as corporations or governments to raise capital, promising to pay back the principal along with interest on specified dates.

European-Style Option

A contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on the expiration date only.