Barriers to cross-border capital flows could ultimately tend to produce differences in rates of return across stock markets.

Question

Quizplus · Accepted Answer

When there are barriers to cross-border capital flows, investors may be limited in their ability to invest in certain markets. This lack of access to certain markets can drive down demand for assets in those markets, leading to lower prices and potentially lower rates of return. As a result, differences in rates of return across markets can arise based on the level of cross-border capital flows.

Barriers to Cross-Border Capital Flows Could Ultimately Tend to Produce