When the Nominal Exchange Rate in Terms of Dollars Per

question 57

Multiple Choice

When the nominal exchange rate in terms of dollars per yen rises

• A)the dollar buys more yen and the dollar has depreciated.
• B)the dollar buys fewer yen and the dollar has depreciated.
• C)the dollar buys more yen and the dollar has appreciated.
• D)the dollar buys fewer yen and the dollar has appreciated.

---

Definitions:

SML Approach

Stands for Security Market Line, a graphical representation used in finance to demonstrate the relationship between risk and expected return of assets.

Systematic Risk

The risk inherent to the entire market or a market segment that cannot be mitigated through diversification, often influenced by factors like economic, political, and social changes.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often estimated using models like the Capital Asset Pricing Model (CAPM).

Dividend Growth

Dividend growth is the rate at which a company's dividend payments to shareholders increase over time.