A Foreign Currency Is Said to Have Depreciated Against the Dollar

question 11

Multiple Choice

A foreign currency is said to have depreciated against the dollar when:

• A)the dollar price of the currency has increased
• B)the foreign currency price of the dollar has increased
• C)the exchange rate of both currencies with respect to the euro has decreased
• D)the exchange rate for both currencies with respect to a third currency has increased

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Definitions:

Exchange Rate Risk

The fluctuation in exchange rates between currencies over time.

Foreign Project

An investment or business venture situated outside of the investor's home country, often requiring analysis of country-specific risks and rewards.

Cross Exchange Rate

The exchange rate between two currencies, derived from their respective exchange rates with a third common currency.

British Pound

The official currency of the United Kingdom, also known as GBP (Great Britain Pound).