The ________ States That Exchange Rates Between Any Two Currencies

question 98

Multiple Choice

The ________ states that exchange rates between any two currencies will adjust to reflect changes in the price levels of the two countries.

• A)theory of purchasing power parity
• B)law of one price
• C)theory of money neutrality
• D)quantity theory of money

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Definitions:

Daily Settlement

The process of reconciling buy and sell positions in futures and options markets at the end of each trading day based on the closing market prices.

Futures Positions

Futures positions are commitments to buy or sell a specified amount of a commodity, currency, or financial instrument at a specified price on a set future date.

Marking To Market

Marking to market is an accounting practice where assets and liabilities are adjusted to their current market values rather than their book values.

Margin Call

A demand by a broker that an investor deposit further cash or securities to cover possible losses.