Consider the Following: an Investor in the U

question 85

Multiple Choice

Consider the following: an investor in the U.S.is pondering a one-year investment.She can purchase a domestic bond for $1,000 that has an interest rate of i or she can purchase a bond in England for 1,500 British pounds (£) that pays an interest rate of i_f.The current exchange rate is $1.50/£.She considers the bonds to be of equal risk.If i = i_f, the expected returns are not equal.What do you know?

• A)The exchange rate is fixed between the U.S.and Britain
• B)The bonds initially sold for different prices
• C)Arbitrage doesn't work
• D)The exchange rate must be flexible

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Psychological Disorders

Conditions characterized by abnormal thoughts, behaviors, and feelings that may cause significant distress or impairment in daily life.

Biological Factors

Components of an organism's makeup, including genetic, neurochemical, and physical attributes, that affect its behavior and health.

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The degree to which different observers or measurements yield consistent results.

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