Suppose the Exchange Rate of the British Pound Is $1

question 42

Multiple Choice

Suppose the exchange rate of the British pound is $1.75 per pound while the exchange value of the Swiss franc is $0.667 cents per franc.The cross exchange rate between the pound and the franc is:

• A).381 franc per pound
• B)1.167 francs per pound
• C)Cannot determine
• D)2.624 francs per pound

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Definitions:

Risk Premium

The extra return above the risk-free rate that investors require to compensate them for choosing to invest in a risky asset.

Portfolio Volatility

A measure of the dispersion of returns for a given security or market index, indicating how much the total value of the portfolio's assets fluctuates over time.

Individual Assets

Distinct items of property or investments owned by individuals, such as stocks, bonds, real estate, or personal property.

Utility Function

A mathematical representation in economics of a consumer's preference ordering over a set of goods or outcomes.