Question 1

During the 1980s,cross-border equity investment was largely confined

Accepted Answer

A) to the equity markets of developed countries. 
B) to the emerging equity markets. 
C) to the equity markets of the former Soviet Union. 
D) none of the above 
A) to the equity markets of developed countries. 
B) to the emerging equity markets. 
C) to the equity markets of the former Soviet Union. 
D) none of the above

Question 2

"Call market" and "crowd trading" take place on

Accepted Answer

A) a non-continuous exchange trading system. 
B) a continuous trading exchange system. 
C) non-continuous markets and continuous markets, respectively. 
D) continuous markets and non-continuous markets, respectively. 
A) a non-continuous exchange trading system. 
B) a continuous trading exchange system. 
C) non-continuous markets and continuous markets, respectively. 
D) continuous markets and non-continuous markets, respectively.

Question 3

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 4

To avoid buying a stock at a price higher than your intention,you need to place ________ rather than a market order.

Accepted Answer

A) stop-loss order 
B) a day order 
C) a good-til-cancelled order 
D) a limit order 
A) stop-loss order 
B) a day order 
C) a good-til-cancelled order 
D) a limit order

Question 5

Solnik (1984)examined the effect of exchange rate changes,interest rate differentials,the level of the domestic interest rate,and changes in domestic inflation expectations.He found that

Accepted Answer

A) international monetary variables had only weak influence on equity returns in comparison to domestic variables. 
B) international monetary variables had a stronger influence on equity returns in comparison to domestic variables. 
C) international monetary variables had no influence at all on equity returns. 
D) none of the above 
A) international monetary variables had only weak influence on equity returns in comparison to domestic variables. 
B) international monetary variables had a stronger influence on equity returns in comparison to domestic variables. 
C) international monetary variables had no influence at all on equity returns. 
D) none of the above

Question 6

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 7

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 8

Stock in Daimler AG,the famous German automobile manufacturer trades on both the Frankfurt Stock Exchange in Germany and on the New York Stock Exchange.On the Frankfurt bourse,Daimler closed at a price of €54.34 on Wednesday,March 5,2008.On the same day,Daimler closed in New York at $83.55 per share.To prevent arbitrage trading between the two exchanges,the shares should trade at the same price when adjusted for the exchange rate.The $/€ exchange rate on March 5 was $1.5203/€1.00.Thus,€54.34 * $1.5203/€ = $82.61,while the closing price in New York was $83.55.The difference is easily explainable by the fact that

Accepted Answer

A) transactions costs exceeded the price difference, so no arbitrage was possible even for market makers. 
B) no one noticed the arbitrage that day, but in a day or so the opening price will adjust. 
C) the New York market closes several hours after the Frankfurt exchange, and thus market prices or exchange rates had changed slightly. 
D) none of the above 
A) transactions costs exceeded the price difference, so no arbitrage was possible even for market makers. 
B) no one noticed the arbitrage that day, but in a day or so the opening price will adjust. 
C) the New York market closes several hours after the Frankfurt exchange, and thus market prices or exchange rates had changed slightly. 
D) none of the above

Question 9

In an agency market,the broker takes the client's order through the agent,who matches it with another public order.The agent can be viewed as

Accepted Answer

A) a dealer. 
B) a specialist. 
C) a broker's broker. 
D) none of the above 
A) a dealer. 
B) a specialist. 
C) a broker's broker. 
D) none of the above

Question 10

Factors affecting international equity returns are

Accepted Answer

A) macroeconomic variables that influence the overall economy. 
B) exchange rate changes. 
C) the industrial structure of the country. 
D) all of the above 
A) macroeconomic variables that influence the overall economy. 
B) exchange rate changes. 
C) the industrial structure of the country. 
D) all of the above

Question 11

American Depository Receipt (ADRs)represent foreign stocks

Accepted Answer

A) denominated in U.S.dollars that trade on European stock exchanges. 
B) denominated in U.S.dollars that trade on a U.S.stock exchange. 
C) denominated in a foreign currency that trade on a U.S.stock exchange. 
D) non-registered (bearer) securities. 
A) denominated in U.S.dollars that trade on European stock exchanges. 
B) denominated in U.S.dollars that trade on a U.S.stock exchange. 
C) denominated in a foreign currency that trade on a U.S.stock exchange. 
D) non-registered (bearer) securities.

Question 12

Companies domiciled in countries with weak investor protection can reduce agency costs between shareholders and management

Accepted Answer

A) by moving to a better county. 
B) by listing their stocks in countries with strong investor protection. 
C) by voluntarily complying with the provisions of the U.S.Sarbanes-Oxley Act. 
D) having a press conference and promising to be nice to their investors. 
A) by moving to a better county. 
B) by listing their stocks in countries with strong investor protection. 
C) by voluntarily complying with the provisions of the U.S.Sarbanes-Oxley Act. 
D) having a press conference and promising to be nice to their investors.

Question 13

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 14

A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price,known as the stop price.When the specified price is reached,your stop order becomes

Accepted Answer

A) a market order. 
B) a good-til-cancelled (GT
C)  order. 
C) a day order. 
D) none of the above 
A) a market order. 
B) a good-til-cancelled (GT
C)  order. 
C) a day order. 
D) none of the above

Question 15

Adler and Simon (1986)examined the exposure of a sample of foreign equity and bond index returns to exchange rate changes.They found that

Accepted Answer

A) changes in exchange rates generally explained a smaller portion of the variability of foreign bond indexes than foreign equity indexes. 
B) changes in exchange rates generally explained none of the variability of foreign bond indexes but completely explained the variability in foreign equity indexes. 
C) changes in exchange rates generally explained a larger portion of the variability of foreign equity indexes than foreign bond indexes. 
D) changes in exchange rates generally explained a larger portion of the variability of foreign bond indexes than foreign equity indexes. 
A) changes in exchange rates generally explained a smaller portion of the variability of foreign bond indexes than foreign equity indexes. 
B) changes in exchange rates generally explained none of the variability of foreign bond indexes but completely explained the variability in foreign equity indexes. 
C) changes in exchange rates generally explained a larger portion of the variability of foreign equity indexes than foreign bond indexes. 
D) changes in exchange rates generally explained a larger portion of the variability of foreign bond indexes than foreign equity indexes.

Question 16

The secondary equity markets of the world serve two major purposes.They provide

Accepted Answer

A) marketability and share valuation. 
B) liquidity and price support. 
C) price discovery and arbitrage. 
D) safety and stability. 
A) marketability and share valuation. 
B) liquidity and price support. 
C) price discovery and arbitrage. 
D) safety and stability.

Question 17

ADRs

Accepted Answer

A) are American Depository Receipts. 
B) denominated in U.S.dollars that trade on a U.S.stock exchange. 
C) are depository receipts for foreign stocks held by the U.S.depository's custodian. 
D) all of the above 
A) are American Depository Receipts. 
B) denominated in U.S.dollars that trade on a U.S.stock exchange. 
C) are depository receipts for foreign stocks held by the U.S.depository's custodian. 
D) all of the above

Question 18

The market capitalization of the developed world

Accepted Answer

A) is about 90 percent of the market capitalization of the entire world. 
B) is about 80 percent of the market capitalization of the entire world. 
C) is about 70 percent of the market capitalization of the entire world. 
D) is about 60 percent of the market capitalization of the entire world. 
A) is about 90 percent of the market capitalization of the entire world. 
B) is about 80 percent of the market capitalization of the entire world. 
C) is about 70 percent of the market capitalization of the entire world. 
D) is about 60 percent of the market capitalization of the entire world.

Question 19

Global Registered Shares

Accepted Answer

A) are created when a MNC issues shares globally. 
B) purchased on one exchange (say NYS
E)  is fully fungible with shares purchased on another exchange (e.g.Frankfurt Stock Exchange). 
C) can trade in multiple currencies. 
D) all of the above 
A) are created when a MNC issues shares globally. 
B) purchased on one exchange (say NYS
E)  is fully fungible with shares purchased on another exchange (e.g.Frankfurt Stock Exchange). 
C) can trade in multiple currencies. 
D) all of the above

Question 20

Following monetary union and the advent of the euro:

Accepted Answer

A) The countries of the European union have enacted common securities regulation. 
B) A pan-European stock exchange has developed in London, similar to the NYSE in scope and trading practices. 
C) Development of a common securities regulations, even among the countries of the European Union, has not as yet occurred. 
D) None of the above 
A) The countries of the European union have enacted common securities regulation. 
B) A pan-European stock exchange has developed in London, similar to the NYSE in scope and trading practices. 
C) Development of a common securities regulations, even among the countries of the European Union, has not as yet occurred. 
D) None of the above

During the 1980s,cross-border equity investment was largely confined

"Call market" and "crowd trading" take place on

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?

To avoid buying a stock at a price higher than your intention,you need to place ________ rather than a market order.

Solnik (1984)examined the effect of exchange rate changes,interest rate differentials,the level of the domestic interest rate,and changes in domestic inflation expectations.He found that

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

Cross-correlations among major stock markets and exchange markets are

In an agency market,the broker takes the client's order through the agent,who matches it with another public order.The agent can be viewed as

Factors affecting international equity returns are

American Depository Receipt (ADRs)represent foreign stocks

Companies domiciled in countries with weak investor protection can reduce agency costs between shareholders and management

Dealers in an OTC market

A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price,known as the stop price.When the specified price is reached,your stop order becomes

Adler and Simon (1986)examined the exposure of a sample of foreign equity and bond index returns to exchange rate changes.They found that

The secondary equity markets of the world serve two major purposes.They provide

ADRs

The market capitalization of the developed world

Global Registered Shares

Following monetary union and the advent of the euro:

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

During the 1980s,cross-border equity investment was largely confined

"Call market" and "crowd trading" take place on

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?

To avoid buying a stock at a price higher than your intention,you need to place ________ rather than a market order.

Solnik (1984)examined the effect of exchange rate changes,interest rate differentials,the level of the domestic interest rate,and changes in domestic inflation expectations.He found that

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

Cross-correlations among major stock markets and exchange markets are

In an agency market,the broker takes the client's order through the agent,who matches it with another public order.The agent can be viewed as

Factors affecting international equity returns are

American Depository Receipt (ADRs)represent foreign stocks

Companies domiciled in countries with weak investor protection can reduce agency costs between shareholders and management

Dealers in an OTC market

A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price,known as the stop price.When the specified price is reached,your stop order becomes

Adler and Simon (1986)examined the exposure of a sample of foreign equity and bond index returns to exchange rate changes.They found that

The secondary equity markets of the world serve two major purposes.They provide

ADRs

The market capitalization of the developed world

Global Registered Shares

Following monetary union and the advent of the euro:

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