The Following Figure Depicts the Demand for Chinese Yuan in the Foreign

question 3

Multiple Choice

The following figure depicts the demand for Chinese yuan in the foreign currency exchange market. Use this figure to answer the questions that follow.

-If the interest rates in China rise relative to interest rates in the United States,the demand curve in the figure above:

• A) will not shift because interests rates are not related to exchange rates.
• B) will not shift because interests rates only affect the supply curve.
• C) can either increase from D₁ to D₂ or decrease from D₁ to D₃.
• D) will increase from D₁ to D₂.
• E) will decrease from D₁ to D₃.

Understand strategies to manage and reduce the cash conversion cycle.

Learn to construct and utilize a cash budget.

Comprehend the differences and use of short-term financing options.

Grasp the concept of working capital financing policy.

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