D Question 18 1 pts What is the expected dollar rate of return on dollar deposit
ID: 1112689 • Letter: D
Question
D Question 18 1 pts What is the expected dollar rate of return on dollar deposits with today's exchange rate at $1.10 per euro, next year's expected exchange rate at $1.165 per euro, the dollar interest rate at 10%, and the euro interest rate at 5%? 0% 1196 1096 1596 0-1% DQuestion 19 1 pts If the dollar interest rate is 4 percent, the euro interest rate is 6 percent, then O an investor should invest only in euros. O invest only in euros if the exchange rate is expected to remain constant. O invest only in dollars if the exchange rate is expected to remain constant. O an investor should invest only in dollars O an investor should be indifferent between dollars and euros. DQuestion 20 1 pts Which one of the following statements is the most accurate? O a decrease in the average value of transactions carried out by a household or a firm causes its demand for real money to rise. O A rise in the average value of transactions carried out by a household or a firm causes its demand for real money to rise. O A reduction in the average value of transactions carried out by a household or a firm causes its demand for money to rise. O A rise in the average value of transactions carried out by a household or a firm causes its demand for money to fall.Explanation / Answer
20) B A rise in avg value of transaction increases the demand for real money.
19)B. If the exchange rate is constant then you should invest in Euro because real interest rate will be greater than dollar rate.
18)A. Because dollar depreciated by 5% and this is the advantage of dollar over Euro in interest rate. This is expected real interest rate of dollar over Euro.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.