From Which of the Following Does a Nation's Demand for Foreign

question 6

Multiple Choice

From which of the following does a nation's demand for foreign exchange arise?

• A)From the inflow of foreign investments
• B)From the sale of the foreign currency by the speculators when they expect the foreign currency to depreciate
• C)From speculators when they expect the foreign currency to appreciate
• D)Both a & c

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Definitions:

Stated Rate

The annual interest rate of a bond or loan without adjusting for compounding or other factors, often differing from the effective rate or annual percentage rate (APR).

Annual Percentage Rate

The annual rate charged for borrowing or earned through an investment, which represents the actual yearly cost over the term of a loan.

Effective Annual Rate

The interest rate on an investment or loan that is annualized and takes compounding into account, providing a full picture of the annual interest.

Effective Annual Rate

The real interest rate a savings account, loan, or investment earns, once compounding has been taken into consideration.