The Foreign Exchange Market Is NOT Efficient Because

question 43

Multiple Choice

The foreign exchange market is NOT efficient because

• A) market participants do not compete with one another due to the fact that exchange takes place around the world and not in a single centralized location.
• B) dealers have ask prices that are higher than bid prices.
• C) central governments dominate the foreign exchange market and everybody knows that by definition, central governments are inefficient.
• D) none of the reasons listed are accurate because the foreign exchange market is efficient.

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Definitions:

Implicit Assumption

An underlying premise that is taken for granted or understood without being explicitly stated.

Guidance

The act of offering direction, advice, or instructional information to another, usually aimed at achieving a goal or solving a problem.

Explicit Reason

A clear and detailed reason that is directly stated or explained, without ambiguity.

Guidance

The act of offering direction, advice, or recommendations on how to proceed in a situation.