Question 1

American depository receipts allow foreign stocks to be traded in the United States markets very similarly to U.S. stocks.

Accepted Answer

A) True 
 B)False

Question 2

The best possible way of achieving international diversification is to invest in United States companies having a large share of their business coming from foreign investment.

Accepted Answer

A) True 
 B)False

Question 3

In the developing world, Germany has the second largest equity market after the United States.

Accepted Answer

A) True 
 B)False

Question 4

Countries are divided into developed and emerging markets based on the market capitalization of their stock market.

Accepted Answer

A) True 
 B)False

Question 5

There may be an opportunity for profit in a politically unstable country if:

Accepted Answer

A) that country's domestic investors overreact in response to political changes. 
B) the regime in power is openly courting big business. 
C) the leaders of that country decide to cancel all foreign debt obligations. 
D) More than one of the above 
A) that country's domestic investors overreact in response to political changes. 
B) the regime in power is openly courting big business. 
C) the leaders of that country decide to cancel all foreign debt obligations. 
D) More than one of the above

Question 6

The correlation coefficient measures the movement of one series of data to another series of data over the same time period.

Accepted Answer

A) True 
 B)False

Question 7

Generally, foreign markets are more liquid and efficient than U.S. capital markets.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements about mutual funds and closed-end investment companies investing in foreign companies is true?

Accepted Answer

A) The fund managers are specialists at handling various foreign investment problems 
B) It is difficult to track the stock prices of foreign equity investments 
C) Professional management provides an opportunity for superior returns compared to the foreign market 
D) All of the above are true 
A) The fund managers are specialists at handling various foreign investment problems 
B) It is difficult to track the stock prices of foreign equity investments 
C) Professional management provides an opportunity for superior returns compared to the foreign market 
D) All of the above are true

Question 9

An investment in Mexico produces a return of 80%. However, the Mexican peso has just declined by 45%, relative to the dollar. The previous value of the peso was $.0066. The adjusted return on the investment is a(n):

Accepted Answer

A) 42% gain. 
B) 8.5% loss. 
C) 1.0% loss. 
D) None of the above 
A) 42% gain. 
B) 8.5% loss. 
C) 1.0% loss. 
D) None of the above

Question 10

Risk exposure to foreign currency changes can be hedged through foreign exchange contracts or foreign currency options.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is NOT a valid reason for discounting the importance of stable foreign currency in evaluating international investment alternatives?

Accepted Answer

A) A devaluation in one country is usually offset by an increase in value in another 
B) The overall effect of a devaluation in the economy of the country is insignificant 
C) Risk exposure can be hedged through foreign exchange contracts or foreign currency options 
D) All of the above are valid reasons 
A) A devaluation in one country is usually offset by an increase in value in another 
B) The overall effect of a devaluation in the economy of the country is insignificant 
C) Risk exposure can be hedged through foreign exchange contracts or foreign currency options 
D) All of the above are valid reasons

Question 12

Political risk can best be effectively reduced or eliminated:

Accepted Answer

A) by investing only in European countries. 
B) through sufficient international diversification. 
C) by investing only in countries friendly to the United States. 
D) All of the above 
A) by investing only in European countries. 
B) through sufficient international diversification. 
C) by investing only in countries friendly to the United States. 
D) All of the above

American depository receipts allow foreign stocks to be traded in the United States markets very similarly to U.S. stocks.

The best possible way of achieving international diversification is to invest in United States companies having a large share of their business coming from foreign investment.

In the developing world, Germany has the second largest equity market after the United States.

Countries are divided into developed and emerging markets based on the market capitalization of their stock market.

There may be an opportunity for profit in a politically unstable country if:

The correlation coefficient measures the movement of one series of data to another series of data over the same time period.

Generally, foreign markets are more liquid and efficient than U.S. capital markets.

Which of the following statements about mutual funds and closed-end investment companies investing in foreign companies is true?

An investment in Mexico produces a return of 80%. However, the Mexican peso has just declined by 45%, relative to the dollar. The previous value of the peso was $.0066. The adjusted return on the investment is a(n):

Risk exposure to foreign currency changes can be hedged through foreign exchange contracts or foreign currency options.

Which of the following is NOT a valid reason for discounting the importance of stable foreign currency in evaluating international investment alternatives?

Political risk can best be effectively reduced or eliminated:

The Investment Setting

Security Markets

Participating in the Market

Investment Companies: Mutual Funds, Exchange-Traded Funds, Closed-End Funds, and Unit Investment Trusts

Economic Activity

Industry Analysis

Valuation of the Individual Firm

Financial Statement Analysis

Efficient Markets and Anomalies

Behavioral Finance and Technical Analysis

Bond and Fixed-Income Fundamentals

Principles of Bond Valuation and Investment

Convertible Securities and Warrants

Put and Call Options

Commodities and Financial Futures

Stock Index Futures and Options

A Basic Look at Portfolio Management and Capital Market Theory

Duration and Bond Portfolio Management

Investments in Real Assets

Alternative Investments: Private Equity and Hedge Funds

Measuring Risks and Returns of Portfolio Managers

A Comprehensive Analysis for Real Estate Investment Decisions

The Makeup of Institutional Investors

Filters

Exam 19: International Securities Markets

American depository receipts allow foreign stocks to be traded in the United States markets very similarly to U.S. stocks.

The best possible way of achieving international diversification is to invest in United States companies having a large share of their business coming from foreign investment.

In the developing world, Germany has the second largest equity market after the United States.

Countries are divided into developed and emerging markets based on the market capitalization of their stock market.

There may be an opportunity for profit in a politically unstable country if:

The correlation coefficient measures the movement of one series of data to another series of data over the same time period.

Generally, foreign markets are more liquid and efficient than U.S. capital markets.

Which of the following statements about mutual funds and closed-end investment companies investing in foreign companies is true?

An investment in Mexico produces a return of 80%. However, the Mexican peso has just declined by 45%, relative to the dollar. The previous value of the peso was $.0066. The adjusted return on the investment is a(n):

Risk exposure to foreign currency changes can be hedged through foreign exchange contracts or foreign currency options.

Which of the following is NOT a valid reason for discounting the importance of stable foreign currency in evaluating international investment alternatives?

Political risk can best be effectively reduced or eliminated:

The Investment Setting

Security Markets

Participating in the Market

Investment Companies: Mutual Funds, Exchange-Traded Funds, Closed-End Funds, and Unit Investment Trusts

Economic Activity

Industry Analysis

Valuation of the Individual Firm

Financial Statement Analysis

Efficient Markets and Anomalies

Behavioral Finance and Technical Analysis

Bond and Fixed-Income Fundamentals

Principles of Bond Valuation and Investment

Convertible Securities and Warrants

Put and Call Options

Commodities and Financial Futures

Stock Index Futures and Options

A Basic Look at Portfolio Management and Capital Market Theory

Duration and Bond Portfolio Management

Investments in Real Assets

Alternative Investments: Private Equity and Hedge Funds

Measuring Risks and Returns of Portfolio Managers

A Comprehensive Analysis for Real Estate Investment Decisions

The Makeup of Institutional Investors

Filters