Question 1

Studies examining the influence of industrial structure on foreign equity returns

Accepted Answer

A) conclusively show a connection. 
B) have been inconclusive. 
C) show that industrialized economies outperform lesser developed economies. 
D) none of the above 
A) conclusively show a connection. 
B) have been inconclusive. 
C) show that industrialized economies outperform lesser developed economies. 
D) none of the above

Question 2

The turnover ratio percentages for 27 equity markets of developed countries for the five years beginning with 2002 were measured.Most national equity markets had very high turnover ratios,with the great majority in excess of

Accepted Answer

A) 15 percent turnover per year. 
B) 25 percent turnover per year. 
C) 50 percent turnover per year. 
D) 75 percent turnover per year. 
A) 15 percent turnover per year. 
B) 25 percent turnover per year. 
C) 50 percent turnover per year. 
D) 75 percent turnover per year.

Question 3

Which factors fuel the sale of "Yankee" stock offerings?

Accepted Answer

A) Privatization by many Latin American and Eastern European government-owned companies. 
B) The rapid growth in the economies of the developing world. 
C) The expected large demand for new capital by Mexican companies now that NAFTA has been approved. 
D) All of the above 
A) Privatization by many Latin American and Eastern European government-owned companies. 
B) The rapid growth in the economies of the developing world. 
C) The expected large demand for new capital by Mexican companies now that NAFTA has been approved. 
D) All of the above

Question 4

Call markets and crowd trading offer advantages for __________ because they mitigate the possibility of sparse order flow over short time periods.

Accepted Answer

A) thinly traded issues 
B) actively traded issues 
C) stocks but not bonds 
D) None of the above 
A) thinly traded issues 
B) actively traded issues 
C) stocks but not bonds 
D) None of the above

Question 5

Investment in foreign equity markets

Accepted Answer

A) is no longer considered a "backwater" in the field of Finance. 
B) became common practice in the 1980s as investors diversified their portfolios. 
C) during the 1980s was largely confined to the developed world. 
D) all of the above 
A) is no longer considered a "backwater" in the field of Finance. 
B) became common practice in the 1980s as investors diversified their portfolios. 
C) during the 1980s was largely confined to the developed world. 
D) all of the above

Question 6

Cross-correlations among major stock markets and exchange markets are

Accepted Answer

A) relatively high. 
B) relatively low. 
C) essentially perfect. 
D) practically zero. 
A) relatively high. 
B) relatively low. 
C) essentially perfect. 
D) practically zero.

Question 7

Decompose the return an American would have if he had bought a German stock at €100 per share and sold it one year later at €120.The spot exchange rate one year ago was $1.50 = €1 and the spot rate prevailing at the end of the year was $1.55 = €1.

Accepted Answer

A) 24% total return; 20% asset return; 4% attributable to exchange rate changes 
B) 20% total return; 16.77% asset return; 3.23% attributable to exchange rate changes 
C) 24% total return; 20% asset return; 3.33% attributable to exchange rate changes 
D) None of the above 
A) 24% total return; 20% asset return; 4% attributable to exchange rate changes 
B) 20% total return; 16.77% asset return; 3.23% attributable to exchange rate changes 
C) 24% total return; 20% asset return; 3.33% attributable to exchange rate changes 
D) None of the above

Question 8

A "primary" stock market is

Accepted Answer

A) a big internationally-important market like the NYSE. 
B) a market where corporations issue new shares to initial investors. 
C) where brokers and market makers trade. 
D) none of the above 
A) a big internationally-important market like the NYSE. 
B) a market where corporations issue new shares to initial investors. 
C) where brokers and market makers trade. 
D) none of the above

Question 9

Dealers in an OTC market

Accepted Answer

A) stand ready to buy at the bid and sell at the ask price. 
B) set their own bid and ask prices. 
C) do not charge commissions. 
D) all of the above 
A) stand ready to buy at the bid and sell at the ask price. 
B) set their own bid and ask prices. 
C) do not charge commissions. 
D) all of the above

Question 10

Which investment is likely to be the least liquid?

Accepted Answer

A) A share of publicly traded company trading on the NYSE. 
B) A bond issued by a Fortune 500 company. 
C) A house in a nice part of town. 
D) a) and b) are equally liquid 
A) A share of publicly traded company trading on the NYSE. 
B) A bond issued by a Fortune 500 company. 
C) A house in a nice part of town. 
D) a) and b) are equally liquid

Question 11

The OTC market

Accepted Answer

A) does not accept credit-the dealers "only take cash". 
B) is a dealer market. 
C) includes the NASDAQ in the U.S. 
D) both b) and c) 
A) does not accept credit-the dealers "only take cash". 
B) is a dealer market. 
C) includes the NASDAQ in the U.S. 
D) both b) and c)

Question 12

In the London market,Rolls-Royce stock closed at £0.875 per share.On the same day,the British Pound sterling to the U.S.dollar spot exchange rate was £0.6366/$1.00.Rolls Royce trades as an ADR in the OTC market in the United States.Five underlying Rolls-Royce shares are packaged into one ADR.If the Rolls Royce ADRs were trading at $5.75 when the underlying shares were trading in London at £0.875,ignoring transaction costs,the arbitrage trading profit would be:

Accepted Answer

A) $0.00 
B) $1.12 
C) $2.12 
D) $3.12 
A) $0.00 
B) $1.12 
C) $2.12 
D) $3.12

Question 13

The advantages of a market order include the fact that

Accepted Answer

A) you are pretty much guaranteed that your order will be executed (assuming that there are willing buyers and sellers). 
B) a market order typically has lower commissions than a limit order. 
C) market orders increase your liquidity. 
D) both a) and b) 
A) you are pretty much guaranteed that your order will be executed (assuming that there are willing buyers and sellers). 
B) a market order typically has lower commissions than a limit order. 
C) market orders increase your liquidity. 
D) both a) and b)

Question 14

Unlike day orders,a good-til-cancelled (GTC)order is an order to buy or sell a security at a specific or limit price that lasts until the order is completed or cancelled.Which of the following are true?

Accepted Answer

A) A GTC order will not be executed until the limit price has been reached, regardless of how many days or weeks it might take. 
B) Investors often use GTC orders to set a limit price that is far away from the current market price. 
C) Some brokerage firms may limit the time a GTC order can remain in effect and may charge more for executing this type of order. 
D) All of the above are true 
A) A GTC order will not be executed until the limit price has been reached, regardless of how many days or weeks it might take. 
B) Investors often use GTC orders to set a limit price that is far away from the current market price. 
C) Some brokerage firms may limit the time a GTC order can remain in effect and may charge more for executing this type of order. 
D) All of the above are true

Question 15

Benetton,an Italian clothier,is listed on the New York Stock Exchange.

Accepted Answer

A) This decision provides their shareholders with a higher degree of protection than is available in Italy. 
B) This decision can be a signal of the company's commitment to shareholder rights. 
C) This may make investors both in Italy and abroad more willing to provide capital and to increase the value of the pre-existing shares. 
D) All of the above 
A) This decision provides their shareholders with a higher degree of protection than is available in Italy. 
B) This decision can be a signal of the company's commitment to shareholder rights. 
C) This may make investors both in Italy and abroad more willing to provide capital and to increase the value of the pre-existing shares. 
D) All of the above

Question 16

Over the last few years,turnover ratios in many emerging markets remained low and market concentration ratios remained high,indicating

Accepted Answer

A) that investment opportunities in these markets have been improving. 
B) that investment opportunities in these markets have not been improving. 
C) that investment opportunities in these markets are about to improve. 
D) none of the above 
A) that investment opportunities in these markets have been improving. 
B) that investment opportunities in these markets have not been improving. 
C) that investment opportunities in these markets are about to improve. 
D) none of the above

Question 17

In general if an investment

Accepted Answer

A) has poor liquidity it should offer investors a liquidity premium. 
B) can be sold fairly quickly at a fair price, it has good liquidity. 
C) both a) and b) 
D) none of the above 
A) has poor liquidity it should offer investors a liquidity premium. 
B) can be sold fairly quickly at a fair price, it has good liquidity. 
C) both a) and b) 
D) none of the above

Question 18

A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order.Once the stop price is touched in the market,the stop-limit order becomes a limit order to buy or to sell at the limit price.Which of the following are true?

Accepted Answer

A) The benefit of a stop-limit order is that the investor can control the price at which the trade will get executed. 
B) A stop-limit order may never get filled if the stock's price never reaches the specified limit price.This may happen especially in fast-moving markets where prices fluctuate wildly. 
C) The use of stop limit orders is much more frequent for stocks that trade on an exchange than in the over-the-counter (OT
C)  market. 
D) In addition, your broker-dealer may not allow you to place a stop limit order on some securities or accept a stop limit order for OTC stocks. 
E) All of the above are true 
A) The benefit of a stop-limit order is that the investor can control the price at which the trade will get executed. 
B) A stop-limit order may never get filled if the stock's price never reaches the specified limit price.This may happen especially in fast-moving markets where prices fluctuate wildly. 
C) The use of stop limit orders is much more frequent for stocks that trade on an exchange than in the over-the-counter (OT
C)  market. 
D) In addition, your broker-dealer may not allow you to place a stop limit order on some securities or accept a stop limit order for OTC stocks. 
E) All of the above are true

Question 19

Yankee stocks

Accepted Answer

A) often trade as ADRs and have higher risks than trading the actual shares. 
B) often trade as ADRs and have lower risks than trading the actual shares. 
C) are bank receipts representing a multiple of foreign shares deposited in a U.S.bank. 
D) both b) and c) 
A) often trade as ADRs and have higher risks than trading the actual shares. 
B) often trade as ADRs and have lower risks than trading the actual shares. 
C) are bank receipts representing a multiple of foreign shares deposited in a U.S.bank. 
D) both b) and c)

Question 20

The sale of new common stock by corporations to initial investors occurs in

Accepted Answer

A) the primary market. 
B) the secondary market. 
C) the OTC market. 
D) the dealer market. 
A) the primary market. 
B) the secondary market. 
C) the OTC market. 
D) the dealer market.

Studies examining the influence of industrial structure on foreign equity returns

The turnover ratio percentages for 27 equity markets of developed countries for the five years beginning with 2002 were measured.Most national equity markets had very high turnover ratios,with the great majority in excess of

Which factors fuel the sale of "Yankee" stock offerings?

Call markets and crowd trading offer advantages for __________ because they mitigate the possibility of sparse order flow over short time periods.

Investment in foreign equity markets

Cross-correlations among major stock markets and exchange markets are

Decompose the return an American would have if he had bought a German stock at €100 per share and sold it one year later at €120.The spot exchange rate one year ago was $1.50 = €1 and the spot rate prevailing at the end of the year was $1.55 = €1.

A "primary" stock market is

Dealers in an OTC market

Which investment is likely to be the least liquid?

The OTC market

The advantages of a market order include the fact that

Unlike day orders,a good-til-cancelled (GTC)order is an order to buy or sell a security at a specific or limit price that lasts until the order is completed or cancelled.Which of the following are true?

Benetton,an Italian clothier,is listed on the New York Stock Exchange.

Over the last few years,turnover ratios in many emerging markets remained low and market concentration ratios remained high,indicating

In general if an investment

A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order.Once the stop price is touched in the market,the stop-limit order becomes a limit order to buy or to sell at the limit price.Which of the following are true?

Yankee stocks

The sale of new common stock by corporations to initial investors occurs in

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

Exam 13: International Equity Markets

Studies examining the influence of industrial structure on foreign equity returns

The turnover ratio percentages for 27 equity markets of developed countries for the five years beginning with 2002 were measured.Most national equity markets had very high turnover ratios,with the great majority in excess of

Which factors fuel the sale of "Yankee" stock offerings?

Call markets and crowd trading offer advantages for __________ because they mitigate the possibility of sparse order flow over short time periods.

Investment in foreign equity markets

Cross-correlations among major stock markets and exchange markets are

Decompose the return an American would have if he had bought a German stock at €100 per share and sold it one year later at €120.The spot exchange rate one year ago was $1.50 = €1 and the spot rate prevailing at the end of the year was $1.55 = €1.

A "primary" stock market is

Dealers in an OTC market

Which investment is likely to be the least liquid?

The OTC market

The advantages of a market order include the fact that

Unlike day orders,a good-til-cancelled (GTC)order is an order to buy or sell a security at a specific or limit price that lasts until the order is completed or cancelled.Which of the following are true?

Benetton,an Italian clothier,is listed on the New York Stock Exchange.

Over the last few years,turnover ratios in many emerging markets remained low and market concentration ratios remained high,indicating

In general if an investment

A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order.Once the stop price is touched in the market,the stop-limit order becomes a limit order to buy or to sell at the limit price.Which of the following are true?

Yankee stocks

The sale of new common stock by corporations to initial investors occurs in

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters