As of Today,the Spot Exchange Rate Is €1

question 41

Multiple Choice

As of today,the spot exchange rate is €1.00 = $1.25 and the rates of inflation expected to prevail for the next year in the U.S.is 2 percent and 3 percent in the euro zone.What is the one-year forward rate that should prevail?

• A)€1.00 = $1.2379
• B)€1.00 = $1.2139
• C)€1.00 = $0.9903
• D)$1.00 = €1.2623

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Definitions:

Savings

The portion of disposable income not spent on consumption of goods and services, set aside for future use or emergencies.

Investment Funds

Pools of capital from multiple investors used to collectively purchase securities while each investor retains ownership and control of their own shares.

Demand

In economics, demand is the quantity of a good or service that consumers are willing and able to purchase at various prices during a certain period of time.

Great Recession

A severe global economic downturn that began in 2007 and lasted until about 2009, marked by significant declines in the housing market, financial failures, and a surge in unemployment rates.