Which of the Following Is NOT an Assumption of Market

question 34

Multiple Choice

Which of the following is NOT an assumption of market efficiency?

• A) Instruments denominated in other currencies are perfect substitutes for one another.
• B) Transaction costs are low or nonexistent.
• C) All relevant information is quickly reflected in both spot and forward exchange markets.
• D) All of the above are true.

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Definitions:

Current Account

An account of a country’s exports and imports of goods, services, and income.

Balance of Trade

The difference between the monetary value of a nation's exports and imports over a certain period. A positive balance means more goods were exported than imported, and vice versa.

World Trade Organization

An international body that deals with the rules of trade between nations, aiming to ensure trade flows as smoothly and predictably as possible.

Multilateral Forum

A platform where three or more countries engage in dialogue and collaboration on issues of common interest.