For an Investor Who Starts with Dollars and Wants to End

question 52

Multiple Choice

For an investor who starts with dollars and wants to end up with dollars in the future,which of the following choices is an example of uncovered international investment?

• A) Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy the foreign currency.
• B) Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy dollars.
• C) Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and then buy dollars at the future spot rate.
• D) Buy a dollar-denominated financial asset.

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Definitions:

Community

A group of people living in the same place or having a particular characteristic in common.

Interplay

The way in which two or more things influence or affect each other.

Values

Positive abstractions that capture our sense of what is good and desirable.

Expectations

Beliefs or anticipations about future events or behaviors, often based on past experiences or societal norms.