Other Things the Same,if the Exchange Rate Changes from

question 3

Multiple Choice

Other things the same,if the exchange rate changes from .8 euros per dollar to .9 euros per dollar,the dollar

• A)depreciates so U.S.goods become less expensive relative to foreign goods.
• B)depreciates so U.S.goods become more expensive relative to foreign goods.
• C)appreciates so U.S.goods become less expensive relative to foreign goods.
• D)appreciates so U.S.goods become more expensive relative to foreign goods.

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Definitions:

Shares

Units of ownership interest in a corporation or financial asset that provide an equal distribution in any profits, if any are declared, in the form of dividends.

European Options

Financial derivatives that give the holder the right to buy or sell the underlying asset at a specified price only at the expiration date.

Black-Scholes Model

A mathematical model of the market for an equity, in which the price of the equity is modeled as a stochastic process, used primarily to price European style options.

Callable Bond

A callable bond is a type of bond that gives the issuer the right to repay the bond before its maturity date, at a predetermined call price.