The One-Year Forward Exchange Rate Is 50 INR/USD

question 33

Multiple Choice

The one-year forward exchange rate is 50 INR/USD.If the one-year interest rate in the United States is 5% and in India it is 8%,what is the spot exchange rate so as to preclude arbitrage?

• A)47.23
• B)48.61
• C)48.99
• D)49.32
• E)49.12

Understand the impact of perceptual illusions on the interpretation of visual stimuli.

Recognize the influence of perceptual sets and contextual effects on visual perception.

Understand the concept of sunk costs and how they impact decision making.

Explain the phenomenon of escalation of commitment and its underlying reasons.

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Definitions:

Dome Formation

The upward bulging of the earth's surface to form a dome, often due to magma pushing upwards.

Eruption Column

A cloud of super-heated ash, gas, and volcanic debris that rises above a volcano during an explosive eruption.

Volcanic Mudflows

Also known as lahars, these are rapid flows of debris, mud, and water that descend from a volcano, typically following an eruption or heavy rainfall.

Flow-Banded Rhyolite

A type of volcanic rock characterized by bands of alternating texture or color, formed by the flow of viscous silicate lava.