Which of the Following Does NOT Describe Why Britain Adopted

question 60

Multiple Choice

Which of the following does NOT describe why Britain adopted the pegged system (the Exchange Rate Mechanism [ERM]) in 1990?

• A) There were benefits to trade and other forms of cross-border exchange.
• B) Britain wanted to hold onto the pound as its currency.
• C) It was a member of the European Union and fixed rates were good for trade with other members.
• D) It hoped to participate in the new common currency when it was launched.

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Definitions:

Clean Price

The price of a bond excluding any accrued interest; the price that is typically quoted in the bond market.

Quoted Price

The last price at which a security or commodity was traded and is publicly available.

Par Value

The face value of a bond or stock as stated by the issuer, which has implications for interest calculations or dividends.

Yield to Maturity

Yield to Maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures, considering all payments from now until maturity, including coupon payments and the difference between the purchase price and the par value.