Suppose a U.S. investor buys a Canadian government bond with a face value of Canadian dollar (CAD) 100 and an annual yield of 8.8 percent. Which of the following statements is true?
a. At maturity, the dollar return from the Canadian bond will be $108.8, regardless of what happens to the exchange rate.
b. The Canadian bond will yield the same dollar return from the time of purchase to the time of maturity.
c. An American will make a profit on the Canadian bond only when the CAD-denominated return is higher on the Canadian bond than the dollar-denominated return on a comparable U.S. bond.
d. The dollar return on the Canadian bond depends on the dollar price of the Canadian dollar at the time of maturity.
e. The decision to buy the Canadian bond should be based solely on the CAD interest return and not on changes in the exchange rate.
d
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Olives are used to produce olive oil. If the price of olives increases
A) the supply of olive oil decreases. B) the supply of olive oil increases. C) the demand for olive oil decreases. D) the demand for olive oil increases.
Have you used ketchup? Have you bought ketchup in a supermarket? Consider the characteristics of market structures and decide to which the ketchup industry belongs
a. oligopoly because it represents competition among the few b. monopolistic competition because the demand curves for each brand is horizontal c. perfect competition because the good is identical (ketchup is ketchup) d. monopoly because the firm demand curve is the industry demand curve e. monopoly because there are no good substitutes
Which of the following is inconsistent with the view that Fed monetary policy was excessively expansionary during 2010-2013?
a. Short-term interest rates that were near zero throughout these years. b. A rapid increase in the monetary base throughout these years. c. A tripling of Fed asset holdings from less than $1 trillion in 2008 to approximately $3 trillion in 2012. d. Growth of nominal GDP during 2010-2012 at a rate similar to that of recent decades.
Other things the same, if the price level falls, people
a. increase foreign bond purchases, so the dollar appreciates. b. increase foreign bond purchases, so the dollar depreciates. c. increase domestic bond purchases, so the dollar appreciates. d. increase domestic bond purchases, so the dollar depreciates.