Large Organizations Cannot Just Be Bigger Versions of Their Smaller

question 59

Multiple Choice

Large organizations cannot just be bigger versions of their smaller counterparts simply due to the fact that as the number of individuals in a firm increases arithmetically,the number of possible interconnections among them __________.

• A)increases moderately
• B)decreases moderately
• C)increases geometrically
• D)decreases geometrically
• E)is unpredictable.

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Definitions:

Covered Interest Arbitrage

A strategy that involves converting currency through the spot exchange market, investing in foreign interest bearing securities, and hedging exchange risk through the forward market to earn riskless profit.

Forward Rate

The predicted interest rate for a loan or investment for a specific period in the future, differing from current rates.

Nominal Risk-Free Rate

The rate of return on an investment with no risk of financial loss, not taking into account inflation.

Purchasing Power Parity

An economic theory that suggests exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.