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nglains DIW PAP GEUMETRY Mr CHS Titan Nature an Several factors affect the exchange rate of a currency with another currency. Which of the true about the factors that have an impact on exchange rates? Check all that apply. following statements are If the demand An increase in infla for a currency increases, the currency's value will increase relative to other currencies tion tends to increase the currency's value with respect to other currencies with lower inflation. hen a government limits imports and restricts foreign exchange transactions, its currency's value tends to increase relative to other currencies. f a government intends to prevent its currency's value from falling relative to other currencies, it will purchase its currency from sellers in the market. If a government intends to prevent its curren The relationship between interest rates and exchange rates can be represented through the concept of interest rate parity. Consider the following: Suppose you observe the following spot and forward exchange rates between the U.S. dollar ($) and the Canadian dollar (C$): Spot Exchange Rate 0.8842 One-Year Forward Exchange Rate 0.9001 Canadian dollar (U.S. dollar/Canadian dollar) The current one-year interest rate on U.S. Treasury securities is 8.03%. If interest rate parity holds, what is the expected yield on one-year Canadian securities of equal risk? 6.12% 5.81% 7.04% 6.73% Interest rate parity recognizes that when you invest in a country other than your home country, two factors affect your investment-returns on the investment itself and changes in the exchange rate. Which of the following would cause the overall return on your investment to be higher than the investment's stated return