Suppose That the Exchange Rate Between the U

question 83

Multiple Choice

Suppose that the exchange rate between the U.S.dollar and the Mexican peso is 1 peso = $0.11.If the U.S.dollar price per Mexican peso changes to 1 peso =$0.10,the peso is said to have __________ and the dollar to have __________.

• A) depreciated; appreciated
• B) appreciated; appreciated
• C) appreciated; depreciated
• D) depreciated; depreciated

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Definitions:

Diverse Portfolio

An investment strategy whereby an individual holds a variety of different investments to reduce risk through diversification.

Stock Market

A public market for buying and selling company stock and derivatives at an agreed price.

Risk Reduction

Strategies or measures taken to minimize the potential for loss or harm in investment, business operations, or other endeavors.

Corporate Bonds

Debt securities issued by corporations to raise capital, promising to repay the principal along with interest.