The System in Which the Country Pegs Its Currency at a Fixed

question 35

Multiple Choice

The system in which the country pegs its currency at a fixed rate to a major currency or basket of currencies,while the exchange rate fluctuates within a narrow margin around a central rate is called a(n) _____.

• A) spot market
• B) fixed exchange rate system
• C) independent floating exchange rate system
• D) managed floating exchange rate system
• E) foreign exchange market

---

Definitions:

Nominal Face Value

The stated value of a financial instrument (e.g., bond) at issuance, unrelated to market value.

Zero Coupon Bond

A debt security that doesn't pay interest but is traded at a deep discount, offering a profit at maturity when the bond is redeemed for its full face value.

Face Value

The nominal value stated on a financial instrument, such as a bond or stock, representing its worth at issuance or maturity.

Market Value

The current price at which an asset or service can be bought or sold in the open market.