Suppose That the One-Year Interest Rate Is 5

question 36

Multiple Choice

Suppose that the one-year interest rate is 5.0 percent in the United States; the spot exchange rate is $1.20/€; and the one-year forward exchange rate is $1.16/€.What must the one-year interest rate be in the euro zone to avoid arbitrage?

• A)5.0%
• B)6.09%
• C)8.62%
• D)none of the options

Recognize the role of credibility and ethics in effective communication.

Demonstrate the ability to communicate a company's image effectively through preferred communication styles.

Understand strategies for delivering negative news in a positive manner.

Understand the importance of perceived fairness and actual fairness in workplace communication.

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Definitions:

Effective Price Ceiling

An effective price ceiling is a government-imposed limit on the price that can be charged for a product or service, set below the market equilibrium, leading to shortages.

Equilibrium Price

The price point at which the market's supplied and demanded goods quantities meet.

Surpluses

Occurs when the quantity of a good or service supplied exceeds the quantity demanded at a specific price; the opposite of shortages.

Shortages

A situation in which the demand for a product or service exceeds the supply available at a particular price.