Under a Floating Exchange-Rate System,if the U

question 67

Multiple Choice

Under a floating exchange-rate system,if the U.S.dollar depreciates against the Swiss franc:

• A) American exports to Switzerland will be cheaper in francs
• B) American exports to Switzerland will be more expensive in francs
• C) American imports from Switzerland will be cheaper in dollars
• D) None of the above

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Definitions:

Bond Market

The financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market.

Over-The-Counter Market

A decentralized market, without a central physical location, where participants trade stocks, commodities, currencies, or other instruments directly between two parties without a broker's intermediation.

Bond Dealers

Entities that trade in bond securities, acting as intermediaries between buyers and sellers in the bond market.

Default Risk Premiums

Additional returns that investors demand from a security issuer to compensate for the risk of default.