If a ﬁnancial portfolio manager in the U.S. buys British company stocks in the London Stock Exchange, this would involve
A) a demand for British pounds in the foreign exchange market.
B) a supply of British pounds in the foreign exchange market.
C) no effect on the demand for British pounds in the foreign exchange market.
D) a demand for U.S. dollars in the foreign exchange market.

Question

Quizplus · Accepted Answer

When a financial portfolio manager in the U.S. buys British company stocks in the London Stock Exchange, they need to convert their U.S. dollars into British pounds in order to make the purchase. This creates a demand for British pounds in the foreign exchange market.

If a ﬁNancial Portfolio Manager in the U