For this question, assume the interest parity conditions holds. Also assume that the domestic interest rate is 9% and that the foreign interest rate is 5%. Given this information, we would expect that
A) individuals will only hold foreign bonds.
B) individuals will only hold domestic bonds.
C) the domestic currency is expected to appreciate by 4%.
D) the domestic currency is expected to depreciate by 4%.
D
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Refer to Scenario 17.3. If there is no insurance and no fire protection program in place, the expected loss from fire for this company is
A) $0. B) $300. C) $3,000. D) $6,000. E) $300,000.
Securitization is the practice of:
A. packaging individual debts into a single uniform asset that can be easily bought and sold. B. the government guaranteeing repayment of risky home loans made to individuals with lower credit. C. borrowing based on expected future earnings. D. backing a security with a riskless asset.
Which statement is false?
A. The 1990s was one of the most prosperous decades in the United States' history. B. The United States' economy reached its tenth year of steady expansion in the spring of 2001. C. Compared to other decades, the 1990s was a decade was unique in that it had strong economic growth with no recessions. D. At the end of the 1990s, the government was running budget surpluses.
The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.