Question 1

Investments in emerging markets are attractive from the standpoint of risk-reduction because they:

Accepted Answer

A) offer higher returns than are available in other markets. 
B) have the lowest correlation with U.S.and European equity markets. 
C) offer lower risks than are found in other markets. 
D) are usually made in USD and avoid currency risk. 
A) offer higher returns than are available in other markets. 
B) have the lowest correlation with U.S.and European equity markets. 
C) offer lower risks than are found in other markets. 
D) are usually made in USD and avoid currency risk.

Question 2

Compare open-end and closed-end mutual funds.

Accepted Answer

Mutual funds are investment funds that i

Question 3

Mutual funds that allow additional investment by existing owners of shares in the fund or investments by new investors are called:

Accepted Answer

A) ongoing funds. 
B) investment funds. 
C) churned funds. 
D) open-end funds. 
A) ongoing funds. 
B) investment funds. 
C) churned funds. 
D) open-end funds.

Question 4

The _________________________________ relies on a transparent accounting system that communicates financial information to stockholders and reduces informational asymmetry.

Accepted Answer

A) Anglo-Saxon model of corporate governance 
B) European model of corporate governance 
C) common law model of corporate governance 
D) government regulation model of corporate governance 
A) Anglo-Saxon model of corporate governance 
B) European model of corporate governance 
C) common law model of corporate governance 
D) government regulation model of corporate governance

Question 5

What factor might lead a government to control or limit the payments made by domestic companies to foreign investors?

Accepted Answer

A) Currency fluctuations and difficulty importing goods 
B) Current account deficits and balance of payment problems 
C) Not enough domestic currency available locally and national pride 
D) High inflation and low GDP 
A) Currency fluctuations and difficulty importing goods 
B) Current account deficits and balance of payment problems 
C) Not enough domestic currency available locally and national pride 
D) High inflation and low GDP

Question 6

__________________ are portfolios of investments jointly owned by groups of investors.

Accepted Answer

A) Joint-stock companies 
B) Mutual funds 
C) Pension funds 
D) Equity holdings 
A) Joint-stock companies 
B) Mutual funds 
C) Pension funds 
D) Equity holdings

Question 7

Investors limited to _________________ are limited in both increasing returns and reducing risks,while investors willing to invest in _______________________ are unconstrained in increasing returns and reducing risks.

Accepted Answer

A) stocks;bonds 
B) debt investing;equities 
C) domestic investments;international investments 
D) current investments;futures 
A) stocks;bonds 
B) debt investing;equities 
C) domestic investments;international investments 
D) current investments;futures

Question 8

If there is a positive correlation between the value of an asset that is invested in and the value of the currency in which that value is represented:

Accepted Answer

A) the covariance risk increases. 
B) the risk associated with the investment is reduced. 
C) the economic risk is increased. 
D) the economic risk and the default risk move in opposite directions and reduce overall risk. 
A) the covariance risk increases. 
B) the risk associated with the investment is reduced. 
C) the economic risk is increased. 
D) the economic risk and the default risk move in opposite directions and reduce overall risk.

Question 9

Information about potential investment opportunities prepared by financial analysts at investment banks,called _____________________,is made available to investors to encourage investment transactions through the investment banks.

Accepted Answer

A) supply-side analysts 
B) investment analysts 
C) sell-side analysts 
D) investor-focused analysts 
A) supply-side analysts 
B) investment analysts 
C) sell-side analysts 
D) investor-focused analysts

Question 10

Internal arrangements related to corporate governance include:

Accepted Answer

A) employment procedures that thoroughly review the backgrounds of executives before they are hired. 
B) incentive contracts for managers and executives. 
C) policies that prohibit unethical conduct in corporate matters. 
D) programs designed to give stockholders a better understanding of corporate actions. 
A) employment procedures that thoroughly review the backgrounds of executives before they are hired. 
B) incentive contracts for managers and executives. 
C) policies that prohibit unethical conduct in corporate matters. 
D) programs designed to give stockholders a better understanding of corporate actions.

Question 11

The increase in international investing in recent years can be attributed primarily to the:

Accepted Answer

A) removal of barriers to investing such as capital controls and taxes. 
B) encouragement of both domestic and foreign governments. 
C) International Monetary Fund. 
D) increased investment opportunities in foreign countries. 
A) removal of barriers to investing such as capital controls and taxes. 
B) encouragement of both domestic and foreign governments. 
C) International Monetary Fund. 
D) increased investment opportunities in foreign countries.

Question 12

Generally,diversification of investments internationally allows investors to benefit from:

Accepted Answer

A) a greater variety of investment opportunities and less risk. 
B) the currency diversification effect and less risk. 
C) the asset diversification effect and less risk. 
D) the currency diversification effect and the asset diversification effect. 
A) a greater variety of investment opportunities and less risk. 
B) the currency diversification effect and less risk. 
C) the asset diversification effect and less risk. 
D) the currency diversification effect and the asset diversification effect.

Question 13

An often overlooked benefit of debt instruments issued by firms in emerging markets is that:

Accepted Answer

A) there is an active secondary market for the instruments,making them very liquid. 
B) a country risk premium is often built into the yield on the debt instrument,increasing the yield above the yield available on other investments. 
C) currency risk is not a consideration since the debt instruments are denominated in USD. 
D) political risks are usually minimized by government guarantees of the instruments. 
A) there is an active secondary market for the instruments,making them very liquid. 
B) a country risk premium is often built into the yield on the debt instrument,increasing the yield above the yield available on other investments. 
C) currency risk is not a consideration since the debt instruments are denominated in USD. 
D) political risks are usually minimized by government guarantees of the instruments.

Question 14

What is corporate governance and how does it affect foreign investments?

Accepted Answer

Corporate governance refers to the mecha

Question 15

International investment can affect the Sharpe Index positively by:

Accepted Answer

A) increasing both return and risk. 
B) decreasing return and increasing risk. 
C) decreasing both return and risk. 
D) increasing return and decreasing risk. 
A) increasing both return and risk. 
B) decreasing return and increasing risk. 
C) decreasing both return and risk. 
D) increasing return and decreasing risk.

Question 16

Mutual funds whose investments are limited to one or more countries are generally:

Accepted Answer

A) closed-end funds. 
B) open-end funds. 
C) ongoing funds. 
D) regulated funds. 
A) closed-end funds. 
B) open-end funds. 
C) ongoing funds. 
D) regulated funds.

Question 17

__________________________ is the term used to identify the propensity of investors to invest in ownership interests in firms rather than in other types of investments.

Accepted Answer

A) Ownership bias 
B) Safe investing 
C) Equity culture 
D) International investing 
A) Ownership bias 
B) Safe investing 
C) Equity culture 
D) International investing

Question 18

How does covariance risk affect foreign investments?

Accepted Answer

Covariance risk is the interaction of th

Question 19

The fact that some mature economies have low GDP while some emerging economies have high GDP is an indication of:

Accepted Answer

A) inefficient markets. 
B) government interference with markets. 
C) disparity in national growth. 
D) inflation. 
A) inefficient markets. 
B) government interference with markets. 
C) disparity in national growth. 
D) inflation.

Question 20

Inefficient markets are most likely to be found:

Accepted Answer

A) where markets are mature and in decline with no usual risk factors. 
B) in third world countries where regulations are lax. 
C) any time that investors are more interested in short-term profits than long-term growth. 
D) where markets are small and developing and have risk factors not found in most other markets. 
A) where markets are mature and in decline with no usual risk factors. 
B) in third world countries where regulations are lax. 
C) any time that investors are more interested in short-term profits than long-term growth. 
D) where markets are small and developing and have risk factors not found in most other markets.

Investments in emerging markets are attractive from the standpoint of risk-reduction because they:

Compare open-end and closed-end mutual funds.

Mutual funds that allow additional investment by existing owners of shares in the fund or investments by new investors are called:

The _________________________________ relies on a transparent accounting system that communicates financial information to stockholders and reduces informational asymmetry.

What factor might lead a government to control or limit the payments made by domestic companies to foreign investors?

__________________ are portfolios of investments jointly owned by groups of investors.

Investors limited to _ are limited in both increasing returns and reducing risks,while investors willing to invest in _______ are unconstrained in increasing returns and reducing risks.

If there is a positive correlation between the value of an asset that is invested in and the value of the currency in which that value is represented:

Information about potential investment opportunities prepared by financial analysts at investment banks,called _____________________,is made available to investors to encourage investment transactions through the investment banks.

Internal arrangements related to corporate governance include:

The increase in international investing in recent years can be attributed primarily to the:

Generally,diversification of investments internationally allows investors to benefit from:

An often overlooked benefit of debt instruments issued by firms in emerging markets is that:

What is corporate governance and how does it affect foreign investments?

International investment can affect the Sharpe Index positively by:

Mutual funds whose investments are limited to one or more countries are generally:

__________________________ is the term used to identify the propensity of investors to invest in ownership interests in firms rather than in other types of investments.

How does covariance risk affect foreign investments?

The fact that some mature economies have low GDP while some emerging economies have high GDP is an indication of:

Inefficient markets are most likely to be found:

Introduction

International Financial Markets: Structure and Innovation

Currency and Eurocurrency Derivatives

Currency Systems and Valuation

Currency Parity Conditions

Currency Risk Exposure Measurement

Currency Exposure Management

Capital Budgeting

Advanced Capital Budgeting

Long-Term Financing

Optimizing and Financing Working Capital

International Alliances and Acquisitions

International Trade

International Taxation and Accounting

Filters

Exam 15: International Portfolio Investments

Investments in emerging markets are attractive from the standpoint of risk-reduction because they:

Compare open-end and closed-end mutual funds.

Mutual funds that allow additional investment by existing owners of shares in the fund or investments by new investors are called:

The _________________________________ relies on a transparent accounting system that communicates financial information to stockholders and reduces informational asymmetry.

What factor might lead a government to control or limit the payments made by domestic companies to foreign investors?

__________________ are portfolios of investments jointly owned by groups of investors.

Investors limited to _________________ are limited in both increasing returns and reducing risks,while investors willing to invest in _______________________ are unconstrained in increasing returns and reducing risks.

If there is a positive correlation between the value of an asset that is invested in and the value of the currency in which that value is represented:

Information about potential investment opportunities prepared by financial analysts at investment banks,called _____________________,is made available to investors to encourage investment transactions through the investment banks.

Internal arrangements related to corporate governance include:

The increase in international investing in recent years can be attributed primarily to the:

Generally,diversification of investments internationally allows investors to benefit from:

An often overlooked benefit of debt instruments issued by firms in emerging markets is that:

What is corporate governance and how does it affect foreign investments?

International investment can affect the Sharpe Index positively by:

Mutual funds whose investments are limited to one or more countries are generally:

__________________________ is the term used to identify the propensity of investors to invest in ownership interests in firms rather than in other types of investments.

How does covariance risk affect foreign investments?

The fact that some mature economies have low GDP while some emerging economies have high GDP is an indication of:

Inefficient markets are most likely to be found:

Introduction

International Financial Markets: Structure and Innovation

Currency and Eurocurrency Derivatives

Currency Systems and Valuation

Currency Parity Conditions

Currency Risk Exposure Measurement

Currency Exposure Management

Capital Budgeting

Advanced Capital Budgeting

Long-Term Financing

Optimizing and Financing Working Capital

International Alliances and Acquisitions

International Trade

International Taxation and Accounting

Filters

Investors limited to _ are limited in both increasing returns and reducing risks,while investors willing to invest in _______ are unconstrained in increasing returns and reducing risks.