Which One of These Statements Is Correct

question 32

Multiple Choice

Which one of these statements is correct?

• A)Relative purchasing power parity says that the expected spot rate 1 year from now is equal to the current spot rate multiplied by (1 + U.S.inflation rate - Foreign inflation rate).
• B)The interest rate parity formula is based on real rates of interest.
• C)An indirect quote is the number of dollars required to purchase one unit of a foreign currency.
• D)Uncovered interest parity is a combination of the unbiased forward rate and interest rate parity.
• E)If the euro per dollar is more expensive in the forward market than in the spot market,the euro is selling at a discount.

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Definitions:

Sales Revenue

The gross income from selling products or services, prior to deducting any costs.

FOB Shipping Point

A shipping term indicating that the buyer is responsible for the goods and the shipping cost as soon as the goods leave the seller's premises.

FOB Destination

A shipping term indicating that the seller is responsible for the goods and the shipping cost until the goods reach the buyer's specified location.

Inventory

The goods and materials that a business holds for the ultimate goal of resale or production.