Suppose That on January 1,1987,the Spot Rate on the Dutch

question 14

Multiple Choice

Suppose that on January 1,1987,the spot rate on the Dutch guilder was $0.39 and the 180-day forward rate was $0.40.The difference between the spot and forward rates suggested that

• A)interest rates were higher in the U.S.than in the Netherlands
• B)the guilder had risen in relation to the dollar
• C)the inflation rate in the Netherlands was declining
• D)the guilder was expected to fall in value relative to the dollar

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Transactions occurring between divisions or units within the same company.

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