Dollar cash flows associated with two foreign inflow currencies will normally be less volatile if the standard deviations of the individual currencies are lower.

Question

Quizplus · Accepted Answer

If the standard deviations of the individual currencies are lower, it implies that these currencies are less volatile. When two stable currencies are involved in a foreign inflow, the dollar cash flows associated with these currencies will also be less volatile.

Dollar Cash Flows Associated with Two Foreign Inflow Currencies Will