A Floating Exchange Rate Occurs When the Value of a Currency

question 53

True/False

A floating exchange rate occurs when the value of a currency is allowed to respond freely to market forces.

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Definitions:

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's shares at certain times during its life, usually at the discretion of the bondholder.

Common Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell shares of a company's common stock at a set price before the option expires.

Corporate Capital Structure

The mix of debt, equity, and other securities that a company uses to finance its activities.

Diluted Earnings Per Share

A metric that calculates a company's earnings per share (EPS) if all convertible securities were converted into common stock, potentially lowering the EPS.