Suppose a U.S. firm buys a one-year U.K. bond for 6,000 British pounds when 1 British pound is worth $1.50 on the foreign exchange market. What is the firm's approximate rate of return on the bond if the interest rate on the bond is 15 percent and the exchange rate is 1 British pound is worth $1.93 at maturity?
a. 11 percent
b. 15 percent
c. 25 percent
d. 33 percent
e. 48 percent
e
You might also like to view...
The exchange rate between the dollar and the euro is
a. the price of European goods relative to U.S. goods. b. the price of U.S. goods relative to European goods. c. the number of euros you get for lending one dollar to a European for a year. d. the number of euros you get for one dollar.
To improve your own bargaining position
a. decrease the value of your outside options b. increase the value of your outside options c. do not alter the value of your outside options d. increase the value of your opponent's outside options
Sometimes, the taxes with the smallest excess burden are:
a. progressive b. regressive c. proportional d. digressive
Which of the following is not a method to reduce the inflationary gap?
A. Increasing government spending B. Reducing transfer payments C. Raising taxes D. Decreasing government expenditure