Expected future spot exchange rate value

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Reference no: EM131101687

Which of the following statements is true?

A) If the expected future spot exchange rate value of the foreign currency decreases, there will be international financial repositioning toward foreign-currency assets, thereby causing the domestic currency to depreciate.

B) If the domestic interest rate rises, there will be international financial repositioning toward domestic-currency assets, thereby causing the domestic currency to appreciate.

C) If foreign interest rates increase with, the domestic interest rate remaining unchanged, there will be international financial repositioning toward domestic-currency assets and the domestic currency will appreciate.

D) If the expected future spot dollar per euro exchange rate increases, there will be international financial repositioning toward the dollar-denominated assets, thereby causing the euro to depreciate.

Reference no: EM131101687

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