Explain four factors that might prevent international capital flows from taking advantage of a relative mispricing among countries(4 marks)

2) The role of the monetary policy committee under the umbrella of central bank is to provide a mechanism for regulation of banks and financial institutions interest rates. This could be done through the introduction of a ceiling, that is to put a cap on the rate of interest charged for loans and fix the minimum rate of interest that such institutions must pay on deposits held. With reference to the above statement, discuss three advantages and three disadvantages of interest rate capping (6 marks)

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Four Factors Preventing Capital Flows from Exploiting Mispricing Transaction Costs Costs associated with international transactions like currency conv... View the full answer