Which of the following is an assumption of most of the traditional models in finance?
A) No nation can place constraints on the transfer of corporate resources.
B) A competitive marketplace exists in which the terms of trade are determined by the participants.
C) Cash flows in various parts of a multinational corporate system are always denominated in the same currencies.
D) The exchange rate is determined by direct negotiation between the host government and the multinational corporation.
E) The ability to curtail unprofitable operations is uniform in all the countries in which subsidiaries operate.

Question

Quizplus · Accepted Answer

Most traditional models in finance assume the existence of a competitive marketplace in which the terms of trade are determined by the participants. This assumption is necessary for the models to function properly and to provide accurate predictions and insights into financial markets. Other options are either incorrect or not relevant to the assumptions of traditional models in finance.

Which of the Following Is an Assumption of Most of the Traditional