Imperfect Asset Substitutability Exists

question 1

Multiple Choice

Imperfect asset substitutability exists

• A) when it is possible for the expected returns on two assets to be different.
• B) when the expected returns on two assets are the same.
• C) only when one asset is foreign and the other is domestic.
• D) when there is risk in the foreign exchange market.
• E) when assets are liquid.

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Definitions:

Unpleasant Stimulus

A negative or harmful stimulus that causes discomfort or aversion in an individual.

Punished

The act of imposing a penalty or negative consequence on someone or something as a result of their behavior or actions.

Operant Conditioning

A learning process through which behavior is shaped and maintained by consequences, including rewards and punishments.

Classical Conditioning

Classical conditioning refers to the learning mechanism where a response initially triggered by a second stimulus becomes triggered by the first stimulus after the two stimuli have been paired together repeatedly.