A Foreign Exchange Intervention with an Offsetting Open Market Operation

question 47

Multiple Choice

A foreign exchange intervention with an offsetting open market operation that leaves the monetary base unchanged is called

• A) an unsterilized foreign exchange intervention.
• B) a sterilized foreign exchange intervention.
• C) a balance-of-payment exchange rate rule.
• D) monetary neutrality.

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Definitions:

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Financial Break-Even

The point at which revenues equal expenses and neither profit nor loss is realized.

Required Rate

Also known as the Required Rate of Return, it is the minimum annual percentage return an investor expects to achieve from an investment.

Discounted Payback

The period of time required to recoup the cost of an investment considering the time value of money through discounted cash flows.