Zari Takes a Summer Course in London, England

question 106

Multiple Choice

Zari takes a summer course in London, England. She doesn't buy British pounds at the U.S. airport, where the rate is 1 pound = $1.60. Upon arrival in London, she finds that she can buy pounds for $1.65 each. Which of the following is true?

• A) Zari would have been better off if she had bought pounds in the United States where U.S. dollars were cheaper.
• B) Zari would have been better off if she had bought pounds in the United States where pounds were less expensive.
• C) The pounds were more expensive in London because a currency is always most valued in its home country.
• D) The pounds were more expensive in the United States because they are less available there.
• E) It doesn't matter where she buys the pounds, since she can't use U.S. money anyway once she's in England.

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Definitions:

Cumulative

Referring to something that increases or accumulates over time, such as cumulative voting rights or cumulative dividends.

Stated Value

A value assigned to no-par value stock by the issuing company's board of directors to serve as the stock's legal capital.

No-par Stock

Shares issued without a par value listed on the face of the stock certificate, allowing the company more flexibility in setting their value.

Redemption Value

The value at which a bond or other debt security can be redeemed before its maturity by the issuer.