Suppose $1 Buys 1

question 460

Multiple Choice

Suppose $1 buys 1.20 euros in January and then it buys 1.10 euros in the following December. As a result

• A) the dollar has appreciated.
• B) the euro has appreciated.
• C) the euro has depreciated.
• D) both answers A and C are correct.

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Definitions:

Par Value

The legal capital assigned per share of a stock, which is a nominal value rather than indicative of the market price.

Discount

A reduction from the full amount or value of an item or security, often applied to bonds sold below their face value or to promote sales of products.

Coupon Interest Rate

The percentage of a bond's value that is paid out in interest to the bondholder annually, identical to the coupon rate.

Yield To Maturity

The total return anticipated on a bond if it is held until it matures, considering all interest payments and the repayment of principal.