Question

Which of the following is not a possible explanation for why significant deviations from covered interest parity were observed during the recent global financial crisis? Select one:

a. A crisis-induced worsening of existing impediments to financial trade .
b. An inability of cash-poor institutions to be able to engage in covered transactions.
c. A decline in trust among banks that trade bonds internationally.
d. Crisis-induced increases in mobility of an substitutability among internationally traded bonds.

Answer 1

d. Crisis-induced increases in mobility of an substitutability among internationally traded bonds.