If the Dollar Interest Rate Is 10 Percent and the Euro

question 70

Multiple Choice

If the dollar interest rate is 10 percent and the euro interest rate is 6 percent, and the expected return on dollar depreciation against the euro is 8 percent, then

• A) an investor should invest only in dollars if the expected dollar depreciation against the euro is 8 percent.
• B) an investor should invest only in euros an investor should invest only in dollars if the expected dollar depreciation against the euro is 8 percent.
• C) an investor should be indifferent between dollars and euros an investor should invest only in dollars if the expected dollar depreciation against the euro is 8 percent.
• D) an investor should invest only in dollars.
• E) an investor should invest only in euros.

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Definitions:

Floodplain

A flat area of land adjacent to a river or stream that experiences occasional or periodic flooding.

Real Danger

Real danger denotes a genuine threat to an individual's safety or well-being, necessitating an appropriate response.

Unlikely

Having a low probability of occurring; not likely to happen.

Attitude Stability

The degree to which an individual's attitudes, opinions, and beliefs remain consistent over time, despite external factors or influences.