Interest Rate Caps

question 71

Multiple Choice

Interest rate caps:

• A)first developed in the 1980s.
• B)protect the borrower from rising interest rates.
• C)allow for the exchange of amounts in different currencies by two parties.
• D)protect the lenders from falling interest rates.
• E)allow for the exchange of amounts in different currencies by two parties and protect the lenders from falling interest rates.

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Definitions:

Balance on Current Account

Refers to the difference in value between a country's exports and imports of goods, services, investment incomes, and transfers.

Capital Account Balance

A component of the balance of payments which records net changes in a country's international financial assets and liabilities, including direct investment, portfolio investment, and other investments.

U.S. Dollar

The official currency of the United States and a primary reserve currency used globally in international transactions.

Foreign Exchange

The trading of currencies on the forex market, allowing for the conversion of one currency into another.