In 2008-2009, Iceland and Several Baltic States Increased Their Interest

question 79

Multiple Choice

In 2008-2009, Iceland and several Baltic states increased their interest rates.One would expect which of the following?

• A)U.S.bond prices will fall and the dollar will appreciate.
• B)U.S.bond prices will rise and the dollar will appreciate.
• C)U.S.bond prices will fall and the dollar will depreciate.
• D)U.S.bond prices will rise and the dollar will depreciate.

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Definitions:

Future Value

The predicted amount of money that an investment will grow to at a specified future date, based on an assumed rate of growth.

Interest Rate

A lender's price to a borrower for the asset's usage, quantified as a percentage of the main sum.

Cash Flows

The movement of funds in and out of a business, determining its operating, investing, and financing activities' liquidity.

Lottery Prize

A financial reward won in a lottery, typically involving a large cash sum or valuable goods.