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