If an intermediary holds foreign financial assets and if the dollar appreciates, ceteris paribus, the dollar value of the foreign exchange will do which of the following?
A)increase
B)decrease
C)remain the same
D)increase by decreasing rates

Question

Quizplus · Accepted Answer

When the dollar appreciates, the value of foreign currencies relative to the dollar decreases. Therefore, the dollar value of foreign financial assets held by an intermediary would decrease, assuming all other factors remain constant (ceteris paribus).

If an Intermediary Holds Foreign Financial Assets and If the Dollar