Suppose the Exchange Rate Between the U

question 153

Multiple Choice

Suppose the exchange rate between the U.S.and Argentina is initially set at 20 pesos per dollar and increases to 25 pesos per dollar.In the U.S.economy this would be expected to

• A)increase exports and decrease imports.
• B)increase both exports imports.
• C)decrease both exports imports.
• D)increase imports but have an unpredictable effect on exports.
• E)increase imports and decrease exports.

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Definitions:

At Issue

A term often used when new securities are released to the market, indicating they are currently being offered for sale to the public.

Coupon Bond

A type of bond that pays the holder a fixed interest payment (coupon) at regular intervals until the maturity date when the principal and the final interest payment are paid.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, factoring in its current price, interest payments, and face value.

Par Value

The face value of a bond or stock as stated by the issuing company, which may differ from its market value.