When the Fed ________ interest rates, bond prices ________

Suppose a deposit in New York earns 6 percent a year and a deposit in London earns 4 percent a year. Interest rate parity holds if the

A) U.S. dollar appreciates by 2 percent a year. B) U.S. dollar depreciates by 2 percent a year. C) U.K. pound depreciates by 2 percent a year. D) None of the above answers is correct because interest rate parity requires that the interest rates be the same in both countries.

The amount to which some current amount of money will grow as interest compounds over time is known as:

A. the future value of that sum of money. B. the present value of that sum of money. C. compound interest. D. the time-value of money.