Figure 32-2 -Refer to Figure 32-2. If the Real Exchange Rate Is

question 79

Multiple Choice

Figure 32-2
-Refer to Figure 32-2. If the real exchange rate is 1, then there is a

• A)surplus of 100 so the real exchange rate will fall.
• B)surplus of 100 so the real exchange rate will rise.
• C)shortage of 100 so the real exchange rate will fall.
• D)shortage of 100 so the real exchange rate will rise.

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Definitions:

Call Penalties

Fees or costs that a borrower must pay a lender for the privilege of paying a loan off earlier than the agreed payment schedule.

Call Premiums

The amount by which the price of a callable bond or preferred stock exceeds its par value or redemption price, often stipulated as a penalty for early redemption by the issuer.

Coupon Rates

Interest rates specified on bonds or other fixed-income securities that issuers promise to pay bondholders annually, expressed as a percentage of face value.

Convertible Bonds

Bonds that can be converted into a predetermined amount of the company's equity at certain times during their life, usually at the discretion of the bondholder.