1. The demand for dollars in international markets originates from
A. an increase in the value of the dollar relative to foreign currencies.
B. a decrease in the value of the dollar relative to foreign currencies.
C. foreign purchases of U.S. goods, services and securities.
D. domestic purchases of foreign goods, services and securities.
2. A firm plans to pay a dividend of $2 at the end of the year. After that, dividends are expected to grow by 4% per year indefinitely. The required return is 10%. Which of the following statements is true?
a. the dividend yield is 4% and the capital gains yield is 10%
b. the dividend yield is 4% and the capital gains yield is 6%
c. the dividend yield is 6% and the capital gains yield is 4%
d. the dividend yield and capital gains yield will vary with time
e. none of the above