The Figure Given Below Depicts the Foreign Exchange Market for British

question 72

Multiple Choice

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

-Suppose a U.S. firm buys a one-year U.K. bond for 6,000 British pounds when 1 British pound is worth $1.50 on the foreign exchange market. What is the firm's approximate rate of return on the bond if the interest rate on the bond is 15 percent and the exchange rate is 1 British pound worth $1.93 at maturity?

• A)11 percent
• B)15 percent
• C)25 percent
• D)33 percent
• E)48 percent

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Definitions:

Parasympathetic System

A branch of the autonomic nervous system responsible for conserving energy and controlling bodily functions during rest.

Blood Pressure

is the force exerted by circulating blood upon the walls of blood vessels, often measured for diagnosis since it is closely related to the heart's ability to pump blood.

Digestive Tract

The series of hollow organs joined in a long, twisting tube from the mouth to the anus where food is processed into nutrients.

Local Reflex

Reflex of the intramural plexus of the digestive tract that does not involve the brain or spinal cord.