For a Floating Currency System to Be Effective

question 30

Multiple Choice

For a floating currency system to be effective:

• A)the currency markets must be subject to significant regulation and the central bank must be willing to take action when predetermined indicators suggest action is necessary.
• B)the currency market must be diversified and must not be dominated by any specific currency.
• C)there must be effective market and monetary infrastructures and the currency market must be large and liquid.
• D)the central bank of the nation must have cooperative agreements with the central banks of other nations that allow those other central banks to take actions to stabilize the subject currency.

---

Definitions:

Average Collection Period

The average number of days it takes for a company to receive payment after a sale has been made, indicating the efficiency of credit and collections policies.

Balance Sheet

A financial statement that displays a company’s assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specific period, illustrating its financial performance.

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate revenue.