The Figure Given Below Depicts the Foreign Exchange Market for British

question 8

Multiple Choice

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2

-When a U.S. importer needs $22,000 to settle an invoice for 25,520 Swiss francs, the exchange rate must be:

• A)1 Swiss franc = $1.16.
• B)1 Swiss franc = $0.16.
• C)1 Swiss franc = $0.84.
• D)$1 = 1.16 Swiss franc.
• E)$1 = 1.84 Swiss franc.

---

Definitions:

Discount Rate

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

Present Value

The current worth of a future sum of money or stream of cash flows given a specific rate of return.

Discount Rate

The discount rate is the interest rate used to determine the present value of future cash flows in discounted cash flow analysis.

Discount Periods

Time frames during which a payer can make payment less than the nominal amount due before a specified due date to receive a discount.