You're living and working in France and you believe that the Euro will depreciate relative to the US dollar as prices for goods creep upward over time. You agree on a forward exchange rate of $1.16 per Euro in 90 days. Is this a good idea? Multiple Choice Yes, if the exchange rate in 90 days is less than $116 per Euro. Yes, if the spot exchange rate is less than $116 per Euro None of the options presented here. Yes, if the exchange rate in 90 days is greater than $116 per Euro Yes, if the spot exchange rate is more than $116 per Euro. Yes, if the exKchange rate stays about the same.
You're living and working in France and you believe that the Euro will depreciate relative to the US dollar as prices for goods creep upward over time. You agree on a forward exchange rate of $1.16 per Euro in 90 days. Is this a good idea? Multiple Choice Yes, if the exchange rate in 90 days is less than $116 per Euro. Yes, if the spot exchange rate is less than $116 per Euro None of the options presented here. Yes, if the exchange rate in 90 days is greater than $116 per Euro Yes, if the spot exchange rate is more than $116 per Euro. Yes, if the exKchange rate stays about the same.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:You're living and working in France and you believe that the Euro will depreciate relative to the US dollar as prices for goods creep upward over time.
You agree on a forward exchange rate of $1.16 per Euro in 90 days. Is this a good idea?
Multiple Choice
Yes, if the exchange rate in 90 days is less than $116 per Euro
Yes, if the spot exchange rate is less than $116 per Euro
None of the options presented here.
Yes, if the exchange rate in 90 days is greater than $116 per Euro.
Yes, if the spot exchange rate is more than $116 per Euro.
Yes, if the exKchange rate stays about the same.
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