Which of the Following Reasons Explain Why Interest Rate Parity

question 12

Multiple Choice

Which of the following reasons explain why interest rate parity may not hold perfectly?
I.Controls on financial capital flows
II.Offshore risk accounting rules
III.Different tax rates for interest and foreign exchange rate earnings
IV.Time zone fluctuations

• A) I only
• B) I and III
• C) I, II, and III
• D) I, III, and IV

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.