One Advantage of Adopting a Fixed Exchange Rate Is That

question 145

Multiple Choice

One advantage of adopting a fixed exchange rate is that:

• A)it makes business planning easier.
• B)interest cost fluctuations on foreign loans can be avoided.
• C)inflation can be avoided.
• D)the country can avoid current account surpluses.

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Definitions:

Common Stock

Represents the shares of a company that are owned by its shareholders, which entitle them to vote at shareholder meetings and to receive dividends.

Dividends

Payments made by a corporation to its shareholder members, distributing profits.

Treasury Stock

Shares that were once part of the outstanding shares and have been bought back by the company, reducing the amount of outstanding stock on the open market.

Paid-In Capital

Funds raised by a company through the issuance of common or preferred stock, representing the capital contributed by shareholders in exchange for shares.