When a Country Experiences Capital Flight Its Interest Rate

question 128

Multiple Choice

When a country experiences capital flight its interest rate

• A)and net capital outflow rise.
• B)rises and net capital outflow falls.
• C)falls and net capital outflow rises.
• D)interest rate and net capital outflow fall.

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Definitions:

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two variables, ranging from -1 to 1.

Diversification

A strategy to reduce risk by allocating investments among various financial instruments, industries, and other categories.

Nonsystematic Risk

The part of an investment's risk that is attributable to firm-specific or industry-specific factors and can be mitigated through diversification.

Volatility

A statistical measure of the dispersion of returns for a given security or market index, often used to quantify the risk of the security or market.