The Promise That Was to Hold the Bretton Woods System

question 62

Multiple Choice

The promise that was to hold the Bretton Woods system together was the agreement that

• A)no industrial country would allow high rates of inflation.
• B)foreign central banks would be able to convert U.S. dollars into gold at a fixed price.
• C)no country would raise tariffs on the products of other countries.
• D)all countries would be willing to redeem their paper currencies for gold.

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Definitions:

8 ½% Bond

A bond that pays an annual interest rate of 8.5%, where the interest payment is made to bondholders as compensation for their investment.

Current Yield

The annual income (interest or dividends) divided by the current price of the security, expressed as a percentage.

8% Bond

A bond that pays an annual interest rate of 8% on its face value, typically issued by corporations or governments as a form of debt financing.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, taking into account its current market price, par value, coupon interest rate, and time to maturity.