The Asset Market Approach to Exchange Rate Determination

question 19

Multiple Choice

The asset market approach to exchange rate determination

• A) suggests that investors will hold monetary claims if the rates are low.
• B) suggests that investors will hold monetary claims if they feel optimistic about country's outlook for growth and profitability.
• C) states that equilibrium exchange rate is found when the net inflow (outflow) from current account matches the net outflow (inflow) from financial account.
• D) discards the importance of corporate governance to cross-border portfolio investors.