The Next Questions Refer to the Following

question 10

Multiple Choice

The next questions refer to the following.
Suppose the yen-pound exchange rate is currently £1 = ¥300. A Japanese bank borrows £2 million from UK lenders for 1 year at 6% interest, and lends ¥600 million to Japanese borrowers for 1 year at 8% interest.
-This strategy will fail to yield the bank a profit if

• A) the UK inflation rate exceeds 2% during the year
• B) Japan experiences deflation of 2% or more
• C) the pound appreciates by 2%
• D) the yen appreciates by 2% or more
• E) short term interest rates in the UK rise above 8%

---

Definitions:

Attitudes and Beliefs

The feelings and convictions that influence how individuals perceive and react to their environment and make decisions.

Stimulus Discrimination

The process by which individuals or organisms learn to respond differently to various stimuli that are not identical.

Selective Retention

The process by which individuals remember only information that is consistent with their beliefs or attitudes, ignoring contradictory information.

Selective Comprehension

The process by which consumers interpret information in a way that aligns with their existing beliefs and attitudes, often leading to distorted perceptions.