In Which of the Following Markets Is a Consumer Less

question 9

Multiple Choice

In which of the following markets is a consumer less sensitive to price?

• A)Airlines
• B)Refrigerators
• C)Health Care
• D)Computer components
• E)Washing Machines

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Definitions:

Forward Rates

Interest rates or exchange rates fixed now for financial transactions that will occur at a future date.

Home Currency Approach

A method of assessing an international investment by converting all foreign currencies involved into the investor’s domestic or "home" currency.

Spot Rate

The ongoing market rate at which a certain currency is available for buying or selling for immediate dispatch.

Unbiased Forward Rate

Theoretically, a forward rate in the currencies market that is equal to the spot rate adjusted for interest rate differentials, without any prediction of future direction.