All of the Following Statements Regarding the Effects of Exchange

question 33

Multiple Choice

All of the following statements regarding the effects of exchange rates on international portfolio diversification are true,except:

• A)the volatile exchange rates associated with the current floating exchange rate regime increase the risk-reducing effects of international portfolio diversification.
• B)floating exchange rates introduce an additional element of risk into investing in foreign assets.
• C)adverse exchange rate movements can transform otherwise profitable investments into unprofitable investments.
• D)uncertainty engendered by volatile exchange rates may act as a brake on the otherwise rapid growth of the international capital market.

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Definitions:

Duty of Loyalty

The duty of loyalty is a legal obligation of fiduciaries to act in the best interest of their beneficiaries or principals, avoiding conflicts of interest.

Limited Liability Company

A flexible form of business that combines elements of partnership and corporate structures, providing limited liability protection to its owners.

Members Requirement

Regulations or conditions that must be met for an individual to become or remain a member of a group or organization.

Non-Member Manager

A manager in a limited liability company (LLC) who is not an owner or member of the LLC.