Which period is called the post Bretton Woods era?
A. Before 1914
B. 1914-1945
C. 1945-1971
D. After 1971
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With arbitrage, a trader attempts to purchase a foreign currency at a low price and, at a later date, resell the currency at a higher price in order to make a profit.
Which of the following is NOT feature of the period 1914-1945?
A. The global economy was destroyed by the Two world wars and the Great Depression.
B. A rise in nationalism and increasingly noncooperative policy making.
Capital controls became widespread.
D. International investment was welcome.
Assume the following: (1) the interest rate on 6-month treasury bills is 8 percent per annum in the United Kingdom and 4 percent per annum in the United States; (2) today's spot price of the pound is $1.50 , while the 6-month forward price of the pound is $1.485. By investing in U.K. treasury bills rather than U.S. treasury bills, and not covering exchange rate risk, U.S. investors earn an extra return of:
A. 4 percent per year, 1 percent for the 6 months
B. 4 percent per year, 2 percent for the 6 months
C. 2 percent per year, 0.5 percent for the 6 months
D. 2 percent per year, 1 percent for the 6 months
Which is the second period of the evolution of capital mobility according to Obstfeld and Taylor(2002)?
A. Before 1914
B. 1914-1945
C. 1945-1971
D. After 1971