What is the relationship of currency risk in a floating exchange rate system to the future exchange rate changes?

What will be an ideal response?


Answer: To characterize the risk of a currency position, you must try to characterize the conditional distribution of the future exchange rate changes. With floating exchange rates, you can use data to measure the average historical dispersion (standard deviation or volatility) of the distribution. The higher this volatility, the riskier positions in this currency are.

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A rise in the real interest rate will cause consumer spending to

A. decline. B. not change. C. rise. D. rise at first, then decline later.

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Which of these is a basis by which a federal court may have jurisdiction to hear a case?

A. Federal question B. State question C. Homogenous citizenship D. Police powers

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Only quantitative data are used in the decision-making process

Indicate whether the statement is true or false

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Predictive indicators are easy to ________ and _______ of goal achievement.

a. estimate, doubtful b. count, predictive c. predict, benchmarks d. analyze, unreliable markers

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