If the Interest Rate Is 7 Percent on Euro Deposits

question 53

Multiple Choice

If the interest rate is 7 percent on euro deposits and 5 percent on dollar deposits,and if the dollar is expected to appreciate at a 4 percent rate,

• A) euro deposits have a higher expected return than dollar deposits.
• B) the expected return on euro deposits in terms of dollars is 11 percent.
• C) the expected return on dollar deposits in terms of euros is 1 percent.
• D) the expected return on euro deposits in terms of dollars is 3 percent.
• E) the expected return on dollar deposits equals the expected return on euro deposits.

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Definitions:

Relay Station

A site or mechanism in the body or in a communication system for passing signals or messages from one part or member to another.

Thalamus

A structure in the brain that acts as a relay station, directing sensory signals to the appropriate areas in the cortex.

Brainstem

The lower part of the brain that connects the cerebrum with the spinal cord and controls vital functions such as heart rate, breathing, and blood pressure.

Medulla

A region at the base of the brainstem involved in autonomic functions, such as breathing, heart rate, and blood pressure regulation.