If Currency Traders Expect the Value of the Dollar to Rise

question 9

Multiple Choice

If currency traders expect the value of the dollar to rise, what effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

• A)Demand for dollars will increase and supply of dollars will decrease.
• B)Demand for dollars will increase and supply of dollars will increase.
• C)Demand for dollars will decrease and supply of dollars will increase.
• D)Demand for dollars will decrease and supply of dollars will decrease.

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Definitions:

Discount Date

The last day on which a cash discount may be taken. The day on which a note is discounted (sold).

Due Date

The final day an invoice is to be paid. After that day the buyer may be charged interest. Also, the date by which a loan is to be repaid.

Remittance

Amount that a buyer actually pays after deducting a cash discount.

Discount Period

A certain number of days after the invoice date, during which a buyer may receive a cash discount. The time between a note’s discount date and its maturity date.