This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: If the dollar interest rate is 10 percent and the euro interest rate is 6 percent, then A) an ... (Read 261 times)

kfurse

  • Hero Member
  • *****
  • Posts: 590
on: Jun 30, 2018
If the dollar interest rate is 10 percent and the euro interest rate is 6 percent, then
 
  A) an investor should invest only in dollars if the expected dollar depreciation against the euro is 8 percent.
  B) an investor should invest only in euros if the expected dollar depreciation against the euro is 8 percent.
  C) an investor should be indifferent between dollars and euros if the expected dollar depreciation against the euro is 8 percent.
  D) an investor should invest only in dollars.
  E) an investor should invest only in euros.

Question 2

Explain how BOP disequilibrium is restored under
 
  (a) flexible exchange rates.
   (b) fixed exchange rates, after you define what a BOP disequilibrium means.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

leahchrapun

  • Sr. Member
  • ****
  • Posts: 332
Reply #1 on: Jun 30, 2018
Answer to Question 1

B

Answer to Question 2

(a) It is restored by exchange rate changes causing traded good price changes.
(b) By allowing a devaluation or using trade restrictions or else central banks must finance deficits.


kfurse

  • Member
  • Posts: 590
Reply 2 on: Jun 30, 2018
:D TYSM

raili21

  • Member
  • Posts: 324
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

GI conditions that will keep you out of the U.S. armed services include ulcers, varices, fistulas, esophagitis, gastritis, congenital abnormalities, inflammatory bowel disease, enteritis, colitis, proctitis, duodenal diverticula, malabsorption syndromes, hepatitis, cirrhosis, cysts, abscesses, pancreatitis, polyps, certain hemorrhoids, splenomegaly, hernias, recent abdominal surgery, GI bypass or stomach stapling, and artificial GI openings.

Did you know?

Carbamazepine can interfere with the results of home pregnancy tests. If you are taking carbamazepine, do not try to test for pregnancy at home.

Did you know?

In the ancient and medieval periods, dysentery killed about ? of all babies before they reach 12 months of age. The disease was transferred through contaminated drinking water, because there was no way to adequately dispose of sewage, which contaminated the water.

Did you know?

The first-known contraceptive was crocodile dung, used in Egypt in 2000 BC. Condoms were also reportedly used, made of animal bladders or intestines.

Did you know?

Nitroglycerin is used to alleviate various heart-related conditions, and it is also the chief component of dynamite (but mixed in a solid clay base to stabilize it).

Feedforward control of breathing rate in an animal trained for athletic exercise. Feedforward control of breathing rate in an animal trained for athletic exercise.
Primary production is positively correlated with the evapotranspiration rate. Primary production is positively correlated with the evapotranspiration rate.
Effects of Elevation on Heart Rate and Ventilation Effects of Elevation on Heart Rate and Ventilation
For each function f(x) = 6x^2 - 4, estimate the instantaneous rate of change for the given ... For each function f(x) = 6x^2 - 4, estimate the instantaneous rate of change for the given ...
If a graph has the following x-intercepts, which value of x is the instantaneous rate of change ... If a graph has the following x-intercepts, which value of x is the instantaneous rate of change ...
Outgroup role in relative rate test Outgroup role in relative rate test
Video: Dissociative Disorders (Part 1)

For a complete list of videos, visit our video library