CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

In the Taylor rule framework, the value of a currency is negatively correlated to:
A. relative inflation gap.
B. relative output gap.
C. relative risk premium.
Explanation: For example, the value of the euro will increase against the U.S. dollar if there is a decrease in the risk premium demanded for holding euro-denominated assets relatively to the risk premium on dollar-denominated assets.

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