The Next Questions Refer to the Following

question 21

Multiple Choice

The next questions refer to the following.
Suppose one-year interest rates in Great Britain are 10%, and one-year interest rates in the US are 6%. During the course of the year, the pound depreciates 10% against the dollar.
-Compared to buying US bonds,American speculators who purchased British bonds at the start of the year received rates of return about

• A) 26 percentage points lower
• B) 13 percentage points higher
• C) the same
• D) 2 percentage points higher
• E) 7 percentage points lower

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Definitions:

Mid-ocean Ridge

A worldwide submarine mountain chain, developed through the action of plate tectonics.

Southeastern Asia

A geographic region consisting of countries situated to the southeast of Asia, including Indonesia, Thailand, and Vietnam.

Indian Ocean

The third largest ocean in the world, bounded by Africa to the west, Asia to the north, Australia to the east, and the Southern Ocean to the south.

Fault Strength

A measure of how resistant a fault is to movement or slip under tectonic stresses.