If the International Fisher Effect (IFE) Did Not Hold Based

question 20

Multiple Choice

If the international Fisher effect (IFE) did not hold based on historical data, then this suggests that:

• A) some corporations with excess cash can lock in a guaranteed higher return on future foreign short-term investments.
• B) some corporations with excess cash could have generated profits on average from covered interest arbitrage.
• C) some corporations with excess cash could have generated higher profits on average from foreign short-term investments than from domestic short-term investments.
• D) most corporations that consistently invest in foreign short-term investments would have generated the same profits (on average) as from domestic short-term investments.

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Definitions:

Runaway Slaves

Enslaved people who escaped from their enslavers in pursuit of freedom, often facing severe risks and hardships.

Confederate Ships

Naval vessels that were operated by the Confederate States during the American Civil War to fight against the Union.

Enlist

To voluntarily sign up for military service or, more broadly, to join an organization or cause.

Union Forces

The armed forces of the United States (the North) during the American Civil War.