We Would Not Expect a Japanese Financial Asset and a U.S

question 30

Multiple Choice

We would not expect a Japanese financial asset and a U.S. financial asset with identical risk, liquidity, and information characteristics to have different expected returns because

• A)the U.S. and Japanese governments have pledged themselves to avoid this outcome.
• B)traders would buy the asset with the higher expected yield and sell the asset with the lower expected yield until the yields were brought into equality.
• C)traders would sell the asset with the higher expected yield and buy the asset with the lower expected yield until the yields were brought into equality.
• D)the exchange rate between the dollar and the yen would adjust automatically to eliminate any difference in yields.

---

Definitions:

Mercenaries, Fortresses

refers to a defensive strategy in business or warfare, incorporating hired soldiers (mercenaries) and strongholds (fortresses) for protection and control.

Communes

Social groups living together with shared resources and responsibilities, often with a common ideological or lifestyle foundation.

Organizational Culture

The shared values, beliefs, and norms that influence the way employees think, feel, and behave in an organization.

"Right Way"

A term that implies a belief in an absolute, most effective method or approach to do something.