The assumes that assets are imperfect substitutes internationally because investors perceive foreign exchange risk to be attached to foreign currency denominated bonds.
A) portfolio-balance approach
B) monetary approach
C) traditional exchange rate model
D) All of the above

Question

Quizplus · Accepted Answer

The portfolio-balance approach assumes that assets are imperfect substitutes internationally due to perceived foreign exchange risk associated with foreign currency denominated bonds.

The Assumes That Assets Are Imperfect Substitutes Internationally Because Investors