What Is the Expected Dollar Rate of Return on Dollar

question 55

Multiple Choice

What is the expected dollar rate of return on dollar deposits if today's exchange rate is $1.10 per euro, next year's expected exchange rate is $1.165 per euro, the dollar interest rate is 10%, and the euro interest rate is 5%?

• A) 10%
• B) 11%
• C) -1%
• D) 0%
• E) 5%

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Definitions:

Prevention Focus

A psychological orientation that emphasizes the avoidance of negative outcomes and errors, leading individuals to adhere to rules and responsibilities.

Need For Cognition

A personality trait reflecting the enjoyment or engagement with thinking, problem-solving, and understanding complex ideas.

Self-Monitoring

The awareness and regulation of one's behavior in accordance with the social situations and cues.

Attitude Inoculation

A psychological technique that strengthens an individual's attitudes or beliefs by exposing them to small doses of counterarguments, thereby making them more resistant to future challenges or attacks.