Assume That Interest Rates in London Rise Relative to Those

question 59

Multiple Choice

Assume that interest rates in London rise relative to those in Switzerland.Under a floating exchange-rate system,one would expect the pound (relative to the franc) to:

• A) Depreciate due to the increased demand for pounds
• B) Depreciate due to the increased demand for francs
• C) Appreciate due to the increased demand for francs
• D) Appreciate due to the increased demand for pounds

---

Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, important in financial analysis and investment decisions.

Lease Payments

Lease payments are regular payments made by a lessee to a lessor for the use of an asset, such as property or equipment, over a specified lease term.

Annual Payment

A payment made once a year, often referring to the total amount paid over a twelve-month period for a particular expense.

Desired Sum

An intended total amount or goal that one aims to achieve through calculation or accumulation.