Imperfect Substitution Between Bonds Implies That There Is No Foreign

question 33

True/False

Imperfect substitution between bonds implies that there is no foreign exchange risk premium, and thus, covered interest parity holds.

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Definitions:

Service Revenue

Revenue received by a business from the services it offers to its clients.

Normal Balance

The side of an account, whether debit or credit, where increases in the account are recorded, determined by the account's classification in the accounting equation.

Capital Account

A national account that shows the net change in asset ownership for a country.

Revenue Account

An account that tracks the income earned from a company's primary operations.