Which of the Following Will Generate a Demand for Country

question 111

Multiple Choice

Which of the following will generate a demand for country X's currency in the foreign exchange market?

• A) Travel by citizens of country X in other countries.
• B) The desire of foreigners to buy stocks and bonds of firms in country X.
• C) The imports of country X.
• D) Charitable contributions by country X's citizens to citizens of developing nations.

---

Definitions:

Mispriced Securities

Financial instruments whose market price does not accurately reflect their intrinsic value, potentially leading to buying or selling opportunities.

Risk Arbitrage

Speculation on perceived security mispricing, often in connection with merger and acquisition targets.

One-Factor APT

A financial model that describes the relationship between a security's returns and a single factor affecting all securities, used to predict performance.

Risk-Free Rate

The theoretical rate of return on an investment with zero risk, typically represented by government bonds of a stable country.