In the Equation Profits = a + B × ($/₤

question 19

Multiple Choice

In the equation Profits = a + b × ($/₤ exchange rate) , b is a measure of

• A) the firm's beta when measured in terms of the foreign currency.
• B) the ratio of the firm's beta in terms of dollars to the firm's beta in terms of pounds.
• C) the sensitivity of profits to the exchange rate.
• D) the sensitivity of the exchange rate to profits.
• E) the frequency with which the exchange rate changes.

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Definitions:

Oceanic Plateau

A large, flat, elevated region in the ocean basin, often composed of thickened crust that rises above the surrounding seafloor.

Fracture Zone

A linear zone of irregular topography on the ocean floor characterized by fractures and faults due to plate movements.

Linear Island Chain

A series of islands arranged in a straight line, formed by geological processes such as volcanic activity along a marine ridge.

Island Arc

A curved chain of volcanic islands located at a tectonic plate boundary, over a subduction zone.