Which of the Following Is Not a Potential Disadvantage of Freely

question 5

Multiple Choice

Which of the following is not a potential disadvantage of freely floating exchange rates?

• A) They require larger amounts of international reserves than other exchange systems
• B) Demand schedules for imports and exports may be price speculation
• C) There may occur large amounts of destabilizing speculation
• D) Capital movements among nations may be hindered via exchange rate fluctuations

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Definitions:

Preferred Stock

Stock that has specified rights over common stock.

Operating Activities

Activities directly related to the primary operations of the business, including revenue and expense transactions that affect net income.

Common Stock Split

A division of a company's existing shares into multiple ones to boost the liquidity of the shares, making them more affordable to small investors without altering the shareholder's equity.