Question 1

The home bias effect is the investors' disproportionate investment in:

Accepted Answer

A)  any Residential and commercial real estate. 
B)  real estate in which the assessed value of the building is higher than the assessed value of the land. 
C)  real estate in which the ratio of the assessed value of the building to the assessed value of the land is higher than the average in the same jurisdiction. 
D)  None of these. 
A)  any Residential and commercial real estate. 
B)  real estate in which the assessed value of the building is higher than the assessed value of the land. 
C)  real estate in which the ratio of the assessed value of the building to the assessed value of the land is higher than the average in the same jurisdiction. 
D)  None of these.

Question 2

Talisman Energy is an oil exploration and production company headquartered in Calgary that trades on the New York Stock Exchange. At time of purchase by a Canadian investor the stock's price and the exchange rate were US$10 and US$0.64/C$1.00 respectively. One year later, the investor sold the shares for US$9.50 and the exchange rate was US$0.70/C$1.00.
-If the investor had sold US$5,half of the principal investment amount at the same time that the stock was purchased,forward at the forward exchange rate of US$0.64/C$1.00,the dollar rate of return would be: (Round final percentage answer to 2 decimal places,and do not round intermediate calculations.)

Accepted Answer

A)  -13.14% 
B)  -8.86% 
C)  -5.00% 
D)  8.86% 
A)  -13.14% 
B)  -8.86% 
C)  -5.00% 
D)  8.86%

Question 3

Which of the following characterizes international investor behaviour?

Accepted Answer

A)  Investors are fully diversified. 
B)  Investors hold optimal international portfolios. 
C)  Investors show a home bias in their portfolio holdings. 
D)  Investors don't invest in international stocks. 
A)  Investors are fully diversified. 
B)  Investors hold optimal international portfolios. 
C)  Investors show a home bias in their portfolio holdings. 
D)  Investors don't invest in international stocks.

Question 4

Talisman Energy is an oil exploration and production company headquartered in Calgary that trades on the New York Stock Exchange. At time of purchase by a Canadian investor the stock's price and the exchange rate were US$10 and US$0.64/C$1.00 respectively. One year later, the investor sold the shares for US$9.50 and the exchange rate was US$0.70/C$1.00.
-Calculate the exchange rate return from a Canadian perspective.(Round final percentage answer to 2 decimal places,and do not round intermediate calculations.)

Accepted Answer

A)  -9.38 
B)  -8.57% 
C)  8.57% 
D)  9.38 
A)  -9.38 
B)  -8.57% 
C)  8.57% 
D)  9.38

Question 5

Talisman Energy is an oil exploration and production company headquartered in Calgary that trades on the New York Stock Exchange. At time of purchase by a Canadian investor the stock's price and the exchange rate were US$10 and US$0.64/C$1.00 respectively. One year later, the investor sold the shares for US$9.50 and the exchange rate was US$0.70/C$1.00.
-Calculate the investor's annual percentage rate of return in Canadian dollars.(Round final percentage answer to 2 decimal places,and do not round intermediate calculations.)

Accepted Answer

A)  -13.14% 
B)  -3.19% 
C)  3.19% 
D)  13.14% 
A)  -13.14% 
B)  -3.19% 
C)  3.19% 
D)  13.14%

Question 6

In May 2003 when the exchange rate was Yen 110/$,Nissan Motor Company invested ¥1,100,000,000 in pure-discount U.S.bonds and liquidated the investment one year later when the exchange rate was Yen 105/$.The Yen rate of return earned on this investment was 10%.
a)Calculate the dollar amount that the bonds were sold at.
b)Calculate the dollar rate of return of this investment.

Accepted Answer

a)The dollar amount that the b

Question 7

The mean and standard deviation (SD)of monthly returns,over a given period of time,for the stock markets of two countries,X and Y are: $$\begin{array} { c c c } 
\text { Country } & \begin{array} { l } 
\text { Mean } \
( \% )
\end{array} & \begin{array} { c } 
\text { SD } \
( \% )
\end{array} \
\hline \text { X } & 1.57 & 4.87 \
\text { Y } & 1.92 & 7.64
\end{array}$$ Assuming that the monthly risk-free interest rate is 0.25%,the Sharpe performance measures,SHP(X)and SHP(Y),and the performance ranks,respectively,for X and Y are: (Don't round intermediate calculations and Round your final answers to 3 decimal places.)

Accepted Answer

A)  SHP(X) = 0.271, rank = 1, and SHP(Y) = 0.219, rank = 2 
B)  SHP(X) = 0.271, rank = 2, and SHP(Y) = 0.219, rank = 1 
C)  SHP(X) = 18.84, rank = 1, and SHP(Y) = 23.04, rank = 2 
D)  SHP(X) = 23.04, rank = 2, and SHP(Y) = 18.84, rank = 1 
A)  SHP(X) = 0.271, rank = 1, and SHP(Y) = 0.219, rank = 2 
B)  SHP(X) = 0.271, rank = 2, and SHP(Y) = 0.219, rank = 1 
C)  SHP(X) = 18.84, rank = 1, and SHP(Y) = 23.04, rank = 2 
D)  SHP(X) = 23.04, rank = 2, and SHP(Y) = 18.84, rank = 1

The home bias effect is the investors' disproportionate investment in:

Which of the following characterizes international investor behaviour?

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

International Banking and Money Market

International Bond Market

International Equity Markets

Futures and Options on Foreign Exchange

Interest Rate and Currency Swaps

Management of Economic Exposure

Management of Transaction Exposure

Management of Translation Exposure

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

Exports and Imports

International Tax Environment

Corporate Governance Around the World

Filters

Exam 11: International Portfolio Investment

The home bias effect is the investors' disproportionate investment in:

Which of the following characterizes international investor behaviour?

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

International Banking and Money Market

International Bond Market

International Equity Markets

Futures and Options on Foreign Exchange

Interest Rate and Currency Swaps

Management of Economic Exposure

Management of Transaction Exposure

Management of Translation Exposure

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

Exports and Imports

International Tax Environment

Corporate Governance Around the World

Filters