Which of the following statements is true?
Statement 1- The rate at which currency of one country is converted into currency of other country, is called as foreign exchange rate.
Statement 2- There are 2 types of foreign exchange rate system i.e. Fixed and Formal exchange rate system.
Answer & explanation
Correct answer: option 1
The correct answer is option 1: Only statement 1 is true
- Statement 1 is true. The rate at which currency of one country is converted into the currency of another country is indeed called the foreign exchange rate.
- Statement 2 is false. There are 3 types:
- Fixed exchange rate system
- Flexible exchange rate system
- Managed floating rate system
- "Formal exchange rate system" is not a recognized term.