A Potential Disadvantage of Freely Floating Exchange Rates Is That

question 90

Multiple Choice

A potential disadvantage of freely floating exchange rates is that there would:

• A) Exist excessive amounts of hedging in the foreign exchange markets
• B) Be a lack of incentive to initiate exchange arbitrage
• C) Be excessive amounts of destabilizing speculation
• D) Exist a devaluation bias in the exchange markets

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Definitions:

Net Credit Sales

The total revenue from sales made on credit after subtracting returns and allowances.

Inventory Turnover

A ratio indicating how many times a company's inventory is sold and replaced over a specific period.

Inventory

Refers to the goods and materials a business holds for the purpose of resale or production.

Cost Of Goods Sold

Costs that are directly related to the production of goods a company sells, encompassing expenses for labor and materials.