What Would You Expect to Occur If the Rate of Expected

question 119

Multiple Choice

What would you expect to occur if the rate of expected inflation in Canada is considerably lower than expected inflation in Germany?

• A)The expected spot rate of DM/$will increase
• B)The current spot rate of DM/$will increase
• C)The Dollar should appreciate against the mark
• D)The Dollar should depreciate against the mark

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Definitions:

Compounded Annually

The calculation of interest on both the initial principal and the accumulated interest from previous periods on a yearly basis.

Yearly Contributions

The total amount of money added to a fund or investment over the course of a year.

Rate of Interest

The percentage of a sum of money charged for its use, often expressed annually.

Compounded Semi-Annually

Interest on an investment or loan calculated twice a year and then added to the principal amount, affecting future interest calculations.