A) fewer; depreciate B) fewer; appreciate C) more; depreciate more a ciatc Answer 7. When the real" interest rate is relatively low in a given country, t then the currency of that country is typically expected to be: A) eak, since the country's quoted interest rate would be high relative to the B) strong, since the country's quoted interest rate would be low relative to the C) strong, since the country's quoted interest rate would be high relative to the D) eak, since the country's quoted interest rate would be low relative to the Answer inflation rate inflation rate. inflation rate. inflation rate. 8. Assume that the inflation rate becomes much higher in the U.K. relative to the U.S. pressure on the value of the British pound. Also, This will place assume that interest rates in the U.K. begin to rise relative to interest rates in the U.S. The change in interest rates will place British pound. A) upward; downward B) upward; upward C) downward; upward D) downward: downward Answer pressure on the value of the 9.In general, when speculating on exchange rate movements, the speculator will borrow the currency that is expected to appreciate and invest in the country whose currency is expected to depreciate A) True B) False Answer 10. Baylor Bank believes the New Zealand dollar will appreciate over the next five days from S.48 to $.50. The following annual interest rates apply: Currency Dollars New Zealand dollar (NZ$) ending Rate 7.10% 6.80% orrowing Kate 7.50% 7.25% Baylor Bank has the capacity to borrow either NZS10 million or S5 million. If Baylor Bank's forecast if correct, what will its dollar profit be from speculation over the five- day period (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)? A) S521,325 B) S500,520. C) S104,262