When Arbitrage Occurs Across Countries with Flexible Exchange Rates and When

question 59

Multiple Choice

When arbitrage occurs across countries with flexible exchange rates and when the bonds in each country are identical and there are no barriers to capital flows:

• A)The interest rates on the bonds will be identical
• B)The prices of the bonds will be identical
• C)The inflation rates in each country will be identical
• D)None of the answers provided is correct

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Definitions:

DSM III

The third edition of the Diagnostic and Statistical Manual of Mental Disorders, a standardized classification of mental disorders used by mental health professionals in the U.S.

DSM II

The second edition of the Diagnostic and Statistical Manual of Mental Disorders, a publication for the classification of mental disorders.

DSM-IV-TR

The Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, Text Revision; a manual published by the American Psychiatric Association that categorizes and defines mental disorders.

DSM IV

The Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, a handbook used by healthcare professionals as a guide to diagnose mental disorders.