Question

Arrange sentences A, B, C and D between sentences 1 and 6, so as to form a logical sequence of six sentences.
1. Currency movements can have a dramatic impact on equity returns for foreign investors.
(a) This is not surprising as many developing economies try to peg their exchange rates to the US dollar or to a basket of currencies.
(b) Many developing economies manage to keep exchange rate volatility lower than that in the industrial economies.
(c) India has also gone in for the full float on the current account and abolished the managed exchange rate.
(d) Dramatic exceptions are Argentina, Brazil and Nigeri(a)
6. Another emerging market specific risk is liquidity risk.

• A. ADBC
• B. CDAB
• C. BDAC
• D. CABD

Hint:

When arranging, group general trends first, then exceptions, then reasons, and finally specific country cases.

Answer 1

The Correct Option is C

We start with B, describing the ability of developing economies to manage exchange rate volatility. Then D introduces exceptions to this. A follows, explaining why such pegging is common. Finally, C gives India’s specific example. Sequence: BDAC smoothly connects sentence 1 to sentence 6.