A Dealer in British Pounds Who Thinks That the Pound

question 15

Multiple Choice

A dealer in British pounds who thinks that the pound is about to depreciate

• A)may want to widen his bid-ask spread by raising his ask price.
• B)may want to lower his bid price and his ask price.
• C)may want to lower his ask price.
• D)none of the above.

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Definitions:

Net Present Value

A financial metric that calculates the present value of all future cash flows associated with an investment, minus the initial investment cost.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Unequal Lives

A term used in capital budgeting to describe projects or investments with different durations.

Replacement Chain Method

A capital budgeting technique that compares different investment projects with unequal lifespans by calculating their equivalent annual cost.