What Can Be Said About the Spot Exchange Rate of Dollars

question 23

Multiple Choice

What can be said about the spot exchange rate of dollars for pounds if nominal interest rates are higher in the United States than in the United Kingdom?

• A) It should exceed the forward rate of dollars for pounds.
• B) It should be less than the forward rate of dollars for pounds.
• C) It is expected to increase.
• D) It is expected to remain constant.

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Definitions:

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Sound Cost-Benefit Analysis

The process of evaluating the pros and cons of different investment decisions or projects based on their expected costs and benefits to ensure rational financial planning.

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Strong and often aggressive opposition or anger towards someone or something.

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A personality trait characterized by a person's striving for flawlessness and setting excessively high performance standards, accompanied by overly critical self-evaluations and concerns regarding others' evaluations.