Relative purchasing power parity:

Select one:

a. Analyzes the changes in inflation rates to determine the cause.

b. Looks at the factors that determine the changes in interest rates.

c. Relates differences in inflation rates to changes in exchange rates.

d. States that identical items should cost the same regardless of the currency used to make the purchase.

e. Compares the real rate of return to the nominal rate of return.

Question 15

Suppose that the nominal risk-free rate of interest in Canada is 5%. The nominal risk-free rate in Germany is 8% with inflation of 6%. What is the approximate inflation rate in Canada?

Select one:

a. 2.0%

b. 4.0%

c. 5.0%

d. 6.8%

e. 3.0%

Question 16

The board of directors of DDT Inc. declared a dividend of $0.75 per share payable on Monday, January 28 to shareholders of record as of Monday, January 14. You owned 500 shares of DDT on Wednesday, January 9 when the price was $7.50 per share. Under TSX rules and assuming no taxes and perfect markets, if you sell your 500 shares of DDT on Friday, January 11, what price will you receive, all else the same?

Select one:

a. $3,375

b. $3,500

c. $4,250

d. $3,750

e. $3,000