The Figure Given Below Depicts the Foreign Exchange Market for British

question 99

Multiple Choice

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

-Assume an Australian importer expects to pay 16,000 Australian dollars (AUD) for $8,000 worth of U.S. goods, but on the shipment date 30 days later, the same volume of U.S. goods costs the Australian importer only 10,000 Australian dollars. This means that between the contract date and the payment date, the exchange rate has changed:

• A)from $1 = 1.25 AUD to $1 = 2.0 AUD.
• B)from $1 = 2.0 AUD to $1 = 1.25 AUD.
• C)from $1 = 0.8 AUD to $1 = 0.5 AUD.
• D)from $1 = 0.5 AUD to $1 = 0.8 AUD.
• E)from $1 = 0.5 AUD to $1 = 2.0 AUD.

Develop critical thinking skills to challenge incorrect statements about percentage changes and comparisons.

Understand the historical performance of the Standard & Poor's 500 (S&P 500) index over a defined period.

Apply mathematical skills to calculate the appreciation of investments in the S&P 500 index.

Demonstrate proficiency in performing calculations to four-figure accuracy in various financial contexts.

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Definitions:

Finance

The study and management of money, investments, and other financial instruments. It involves the processes of creating, managing, and investing capital.

Asset

An economic resource that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.

Financial Assets

Assets such as stocks, bonds, bank deposits, or any other instrument that derives value because of a contractual right or ownership claim.

Future Cash Flows

The estimated amount of money to be received or paid out over a specified future period by an investment or business operation.