If the International Fisher Effect (IFE) Did Not Hold Based

question 35

Multiple Choice

If the international Fisher effect (IFE) did not hold based on historical data, this would suggest that:​

• A) ​some corporations with excess cash could lock in a guaranteed higher return on future foreign short-term investments.
• B) ​some corporations with excess cash could have generated profits on average from covered interest arbitrage.
• C) ​some corporations with excess cash could have generated higher profits on average from foreign short-term investments than from domestic short-term investments.
• D) ​most corporations that consistently invest in foreign short-term investments would have generated the same profits (on average) as from domestic short-term investments.

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Definitions:

TM

Transcendental Meditation, a form of silent mantra meditation developed by Maharishi Mahesh Yogi, aimed at promoting relaxation and reducing stress.

Auditory Acuity

The ability or sharpness to hear and distinguish sounds accurately.

LSD

Lysergic acid diethylamide, a powerful hallucinogenic drug that alters perception, mood, and numerous cognitive processes.

PCP

PCP, or Phencyclidine, is a dissociative drug formerly used as an anesthetic, which can cause hallucinations and severe neurobehavioral effects.