Which of the Following Statements Is FALSE

question 10

Multiple Choice

Which of the following statements is FALSE?

• A)The rate of interest paid on government bonds or other securities in a country with a tradition of weak enforcement of property rights is likely not really a risk-free rate.Instead,interest rates in the country will reflect a risk premium for the possibility of default,so relations such as covered interest rate parity will likely not hold exactly.
• B)If the return difference in a segmented financial market results from a market friction such as capital controls,corporations can exploit this friction by setting up projects and raising capital in the high-return country/currency.
• C)Important macroeconomic reasons for segmented capital markets include capital controls and foreign exchange controls that create barriers to international capital flows and thus segment national markets.
• D)A segmented financial market has an important implication for international corporate finance: One country or currency has a higher rate of return than another country or currency,when the two rates are compared in the same currency.

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Definitions:

Mating Strategies

Behavioral approaches employed by individuals to attract or choose partners for reproduction.

Reproductive Potential

The maximum possible number of offspring that an organism can produce under optimal conditions.

Affiliation Motive

The psychological drive to create and maintain social bonds and relationships with others.

Joining Clubs

The act of becoming a member of organized groups or associations, which can provide opportunities for socialization, personal development, and professional networking.