14-47 The decrease in European FX volatility during the last decade has occurred because of
A)the stabilizing force of the euro.
B)reduction in inflation rates in European countries.
C)the reduced volatility in many emerging-market countries.
D)the greater volatilities of Asian currencies.
E)Answers A and B only.

Question

Quizplus · Accepted Answer

The stabilizing force of the euro and the reduction in inflation rates in European countries are the main reasons for the decrease in European FX volatility. Additionally, the reduced volatility in many emerging-market countries has also contributed to this trend. However, the greater volatilities of Asian currencies have not had a significant impact on European FX volatility.

14-47 the Decrease in European FX Volatility During the Last