A Country That Dollarizes

question 95

Multiple Choice

A country that dollarizes

• A)maximizes its seignorage.
• B)earns the same amount of seignorage as it would with a currency board.
• C)earns the same amount of seignorage as it would with exchange-rate targeting.
• D)eliminates its seignorage.
• E)must pay seignorage to other governments to use their currency.

Interpret and calculate the slope of a budget line in the context of portfolio combinations on a risk-return graph.

Apply the concept of risk-return trade-off to portfolio selection.

Explore the impact of mixing risk-free and risky assets on a portfolio's risk and return.

Recognize the role of diversification in managing portfolio risk.

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