Which of the following is not a reason for why domestic and foreign interest rates might differ?
A) differences in transaction costs
B) differences in default risk
C) expected changes in exchange rate
D) differences in the bonds interest rate

Question

Quizplus · Accepted Answer

Differences in the bonds interest rate is actually a reason for why domestic and foreign interest rates might differ. The other options - differences in transaction costs, differences in default risk, and expected changes in exchange rate - are all factors that can affect domestic and foreign interest rates.

Which of the Following Is Not a Reason for Why