The Main Conclusion Drawn from the Theory of Interest Rate

question 29

Multiple Choice

The main conclusion drawn from the theory of interest rate parity is that

• A) a single currency will increase economic welfare.
• B) arbitrage opportunities may persist for long periods of time.
• C) investors can seldom earn higher returns from foreign investments than from domestic ones.
• D) exchange rates adjust slowly to their proper levels.
• E) fixed exchange rates are superior to flexible ones.

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