Suppose the U

question 69

Multiple Choice

Suppose the U.S.dollar is defined by law as being equal to 0.1 ounce of gold.Further suppose the British pound is defined as being equal to 0.05 ounce of gold.The implied exchange rate between the pound and the dollar is

• A)A flexible rate at which $1 = 2 pounds.
• B)A fixed rate at which $1 = 2 pounds.
• C)A fixed rate at which $2 = 1 pound.
• D)A flexible rate at which $2 = 1 pound.

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset, where the asset's cost is evenly spread over its useful life.

Yearly Depreciation

The accounting process of allocating the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear, and tear over time.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument back to their present value, thus helping to determine the potential value of an investment.

Straight-Line Depreciation

A method of allocating an asset's cost evenly throughout its useful life.