Evaluating fixed versus freely floating exchange rate system

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Reference no: EM131859700

1. In evaluating fixed versus freely floating exchange rate systems, one must realize that

a. A country's problems are more contagious to other countries in a freely floating exchange rate environment. (not correct)

b. A country's problems can sometimes be alleviated by freely floating exchange rates.

c. The designation of one system as more desirable may depend on a country's political environment, economic conditions, goals, and policies.

d. A freely floating exchange rate system is always superior to a fixed exchange rate system.

2. $20.000 is invested at an 8% annual interest rate. Calculate the amount and total interest earned after 7 years if:

A) the interest is simple.

B) interest is capitalized every month.

C) interest is capitalized at every moment.

Reference no: EM131859700

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