The nominal interest rate parity condition states that
A) domestic and foreign assets must have nominal returns that are identical, irrespective of the characteristics of the assets.
B) when domestic and foreign assets have identical risk, liquidity, and information characteristics, their nominal returns must also be identical.
C) while nominal returns are equalized across all foreign and domestic assets, real returns may vary widely.
D) while real returns are equalized across all foreign and domestic assets, nominal returns may vary widely.
B
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Eastern Europe is an information-__________ environment, which __________ the use of securities markets for large-firm financing
A) poor; encourages B) poor; discourages C) rich; encourages D) rich; discourages
The interest rate at which commercial banks lend to their customers with the best collateral is known as
a. prime rate. b. federal funds rate. c. discount rate. d. T-bill rate.
If expansionary monetary policy reduces real interest rates in the United States, which of the following is most likely to occur?
a. Net foreign investment will decline, causing the dollar to depreciate and net exports to increase. b. Net foreign investment will decline, causing the dollar to appreciate and net exports to decrease. c. Net foreign investment will increase, causing the dollar to appreciate and net exports to decline. d. Net foreign investment will increase, causing the dollar to depreciate and net exports to increase.
Some time ago, the nation of Republica opened up its paper market to international trade. Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?
a. The price of paper in Republica decreased as a result of the policy change. b. Republica began exporting paper as a result of the policy change. c. The domestic demand curve for paper shifted to the right as a result of the policy change. d. The domestic quantity of paper demanded increased as a result of the policy change.