How Are Exchange Rates Determined

question 129

Multiple Choice

How are exchange rates determined?  

• A) They fluctuate to equate the quantity of foreign currency demanded with the quantity supplied. 
• B) They fluctuate to equate imports and exports. 
• C) They fluctuate to equate interest rates in various countries. 
• D) They fluctuate according to agreements between the governments of various countries.

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Definitions:

Remote Contingent Liability

A potential liability that is considered unlikely to occur and thus is not recorded in financial statements but may be disclosed in the notes.

Disclose Only

A policy or requirement of revealing information without necessitating additional actions or changes based on the disclosure.

Note Issuance

The process of creating and distributing promissory notes, which are written promises to pay a specified sum of money at a future date.

Note Maturity

Note maturity is the date on which the principal amount of a promissory note, bond, or other debt instrument becomes due and payable.