What Approach Assumes That Assets Are Imperfect Substitutes Internationally Because

question 12

Multiple Choice

What approach assumes that assets are imperfect substitutes internationally because investors perceive foreign exchange risk to be attached to foreign assets?

• A) Balance of payments approach
• B) Equilibrium approach
• C) Portfolio-balance approach
• D) Trade balance approach

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Definitions:

Personality Factors

Fundamental traits or dimensions that constitute an individual's personality, often identified through factor analysis in personality psychology.

Needs-Hierarchy Theory

A psychological theory proposed by Abraham Maslow that categorizes human needs into five hierarchical levels, from basic physiological needs to self-actualization.

Gratified

Having given pleasure or satisfaction; in psychological terms, it often relates to the fulfillment of a desire or need.

Hereditary Component

The portion of an individual's traits or characteristics attributed to genetic inheritance from their biological parents.