QUESTION 2 Suppose that some investors have decided that economic and financial

Question

QUESTION 2 Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets, and therefore choose to invest in foreign markets. By using all available information as they act to achieve their goals, these investors are exemplifying O people are rational the economic idea that O people respond to economic incentives optimal decisions are made at the margin. O equity is more important than efficiency

Explanation / Answer

Option a
Since people are making rational choices by investing in foreign markets by weighing all the options against a well-defined set of preferences to choose the best one.

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