The Figure Given Below Depicts the Foreign Exchange Market for British

question 87

Multiple Choice

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2

-Suppose you are a U.S. exporter expecting to receive a payment of NZD1,000 (New Zealand dollars) in 12 months. The annual interest rate on NZD deposits is 5 percent, and the annual interest rate on dollar deposits is 9 percent. If the present exchange rate is $0.50 per NZD and interest rate parity holds, how many dollars do you expect to receive at the maturity date of the export contract?

• A)$2,000
• B)$1,923
• C)$1,000
• D)$580
• E)$520

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Definitions:

Cooperation

The act of working together towards a common goal or purpose, often involving shared efforts or resources.

Unions

are organizations that represent the collective interests of workers, focusing on wage negotiation, work conditions, and benefits.

Motivator

A factor that stimulates an individual to act in a certain way or pursue a particular goal, often leading to enhanced performance or behavior.

Restriction of Productivity

Limitations or constraints that decrease the efficiency or output of a process, system, or individual's work.