Suppose You Are a U

question 55

Multiple Choice

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

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Definitions:

Predicate

The part of a sentence or clause containing a verb that states something about the subject.

Proposition

A statement or assertion that expresses a judgment or opinion, which can be true or false.

Sweet

A taste sensation often associated with sugar and substances that evoke a similar pleasurable experience.

Predicate

The segment of a sentence or clause that includes a verb and makes a statement regarding the subject.