The Asset Market Approach to Forecasting Assumes That Whether Foreigners

question 17

Multiple Choice

The asset market approach to forecasting assumes that whether foreigners are willing to hold claims in monetary form depends on an extensive set of investment considerations. These include all but which of the following choices?

• A) relative real interest rates
• B) capital market liquidity
• C) political safety
• D) All of the above are considered by investors in their decision process.

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Definitions:

Cognitive Dissonance

A state of psychological discomfort caused by holding two conflicting beliefs, values, or attitudes.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses, while giving disproportionately less consideration to alternative possibilities.

Fundamental Attribution Error

The tendency to overemphasize personal traits and minimize situational factors as causes of other people's behavior.

Internal Attributions

The process of assigning the cause of behavior to internal characteristics, traits, or abilities of the individual.