Exam 13: International Equity Markets

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

The advantages of a market order include the fact that

Which factors appear to be fueling the sale of Yankee stocks?

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

Which investment is likely to be the least liquid?

"Yankee" stock offerings are

Which of the following are true?

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

The European Stock Exchange, comparable in volume to the NYSE

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

On the NYSE, limit order prices receive preference in establishing the posted bid and ask prices if they are more favorable than the specialist's. Therefore

A market order

A "primary" stock market is

A specialist on the NYSE

In which type of policy actions by the Fed can liquidity "dry up"?

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.

Following monetary union and the advent of the euro:

A "call market"

American Depository Receipt (ADRs) represent foreign stocks

Transactions in shares of the iShares Funds will typically generate tax consequences. This is because