Imperfect Asset Substitutability Assumes

question 78

Multiple Choice

Imperfect asset substitutability assumes:

• A) the returns on foreign and domestic currency bonds are the same.
• B) the returns on foreign and domestic currency are unrelated.
• C) the returns on foreign and domestic currency are not influenced by risk.
• D) sterilized intervention proves to be unproductive.
• E) the returns on foreign and domestic currency are different, but both are influenced by risk.

---

Definitions:

Similarity

The state of being alike or sharing common features.

Credibility

The quality of being trusted and believed in, often assessed in sources of information or individuals presenting arguments.

Trustworthiness

The quality of being reliable, dependable, and worthy of trust based on honesty, integrity, and reliability.

Propinquity

The effect of physical or psychological proximity on the formation of relationships and people's attraction to each other.