The present value of receiving 200 one year from now when the prevailing rate of interest is 8 percent is
a. 192
b. 185.19
c. 200
d. 208
e. 160
Question 2
Which one of the following is not true?
a. An exchange rate is the price of one currency in terms of another.
b. An exchange rate is the means by which the price of a good in one country is translated into the price to the buyer in another country.
c. The cost of a foreign good in dollars will depend on the current exchange rate.
d. The exchange rate will affect the willingness of foreign buyers and sellers to trade with each other.
e. The exchange rate is the price of a currency in terms of another currency for exchanges of goods and services but not for financial transactions.
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