An Increase in the U

question 120

Multiple Choice

An increase in the U.S. interest rate will most likely

• A) reduce the attractiveness of investment in the United States.
• B) lead to a decrease in the value of the U.S. dollar.
• C) lead to an inflow of funds to the United States and an appreciation of the dollar.
• D) provide a stimulus to U.S. export industries.

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Definitions:

Futures Price

The agreed price for the assets to be traded in the future as determined in a futures contract.

Profit

The financial gain obtained when the revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the activity.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, typically represented by the yield of long-term government bonds.

Stock Index

A measurement of the performance of a group of stocks, which represents a portion of the overall market.