Two Methods for Assessing Exchange Rate Volatility Are to Use

question 62

True/False

Two methods for assessing exchange rate volatility are to use the volatility of historical exchange rate movements and to derive the exchange rate's implied standard deviation from the currency option pricing model.

---

Definitions:

Checkable Deposits

Consist of money in bank accounts that can be drawn upon by writing a check or using a debit card, offering immediate liquidity.

Savings and Loans

Financial institutions that specialize in accepting savings deposits and making mortgage and other loans.

Credit Card Companies

Financial institutions that issue credit cards to consumers, facilitating electronic payment transactions and extending credit.

M1 Definition

A category of the money supply that includes all physical money like coins and currency, as well as demand deposits, and other liquid assets that can be quickly converted to cash.