Exam 13: International Equity Markets

The OTC market

Generally, the higher the turnover ratio,

On the Paris bourse, shares of Avionelle trade at €45. The spot exchange rate is $1.40 = €1.00. What is the no-arbitrage U.S. dollar price of an Avionelle ADR? Assume that transactions costs are negligible.

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

The market capitalization of the developing world

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:

Which investment is likely to be the most liquid?

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?

A common set of factors that affect equity returns include

Many of the larger the larger emerging equity markets (e.g. Korea, India)

In a dealer market, the broker takes the trade through the dealer, who participates in trades as a principal by buying and selling the security for his own account.

The Toronto Stock exchange

Comparing agency versus dealer markets, which combination of the following statements is true: (i) - In a "dealer market," the broker takes the client's order through the agent, who matches it with another public order. (ii) - In an "agency market," the broker takes the trade through the dealer, who participates in trades as a principal by buying and selling the security for his own account. (iii) - In an "agency market," the broker takes the client's order through the agent, who matches it with another public order. (iv) - In a "dealer market," the broker takes the trade through the dealer, who participate in trades as a principal by buying and selling the security for his own account. (v) - An agent can be viewed as a "broker's broker." (vi) - A dealer can be viewed as a "broker's broker."

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

The secondary stock markets

Asprem (1989) found that changes in industrial production, employment, and imports, the level of interest rates, and an inflation measure explained only a small portion of the variability of equity returns for 10 European countries, but that substantially more of the variation was explained by

Yankee stocks

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

Macroeconomic factors affecting international equity returns include

A measure of "liquidity" for a stock market is