Suppose That the One-Year U

question 19

Multiple Choice

Suppose that the one-year U.S.interest rate is 7% and the one-year Swedish interest rate is 10%.If the current spot rate is 6.80 Swedish krona per dollar,what must the one-year forward rate SKr/$ be according to the approximate covered interest parity?

• A) 6.596
• B) 6.720
• C) 7.004
• D) 7.276

Recognize the characteristics and functions of different financial institutions and services.

Identify the characteristics of finance companies including their interest rates and requirements.

Understand the concept and tools of electronic funds transfer.

Recognize the concept of shadow banking and its differentiation from traditional banking.

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Definitions:

Monopolistic Competitors

Companies that have many competitors but try to differentiate their products from others to gain a competitive edge.

Celebrity Advertising

A marketing strategy that uses the fame of a celebrity to promote products or services, leveraging their influence to reach potential customers.

Expensive Substitutes

Expensive substitutes are alternative products or services that are more costly than the original item they replace, often affecting consumer choices.

Brand Names

Labels that distinguish the goods or services of one seller from another seller.