Exam 13: International Capital Market Equilibrium

The APT postulates that other economy-wide factors can systematically affect the returns on a large number of securities.These factors might include all of the following EXCEPT:

Which one of the following causes the regression computation of a stock's beta to be imprecise?

Most investors' portfolios in different countries have a strong home bias which means they hold a ________ share of domestic assets compared to the ________ market portfolio.

What is the name for the process that allows inward and outward foreign equity investment?

Of the following G7 countries,which market returns have the highest correlation with U.S.returns?

In integrated markets,the covariance with the world should determine the expected return on the ________.

What are some benefits of a portfolio that is internationally diversified?

Today in an increasingly globalized world,it makes more sense to use an internationally diversified portfolio of securities as the market portfolio.This CAPM is called the ________.

The exposure of a return to fluctuations in the return on the market portfolio,which cannot be diversified away is called

Why is the computation of cost of capital likely to be higher under the Fama-French model than the CAPM?

What is the name given to the variance that cannot be diversified away?

The Chinese stock markets trade shares issued by the same company for native Chinese and another share for foreign investors.What type of stock market would the Chinese markets be an examples of,a segmented or an integrated equity markets.Why?

What would you expect to happen to the risk-free rate and equity returns when a segmented country opens its capital markets to foreign investment?

________ trade on the ________ equity market and represent a ________ portfolio that may invest in the world markets ________ restricted to a region.

For the most part,stocks are ________ ________,so you ________ diversify away all of a portfolio's variance.Because the average covariance is ________,even a large portfolio of international stock will have a ________ variance.

A hybrid alternative that is rapidly gaining popularity which trades on an exchange but where prices are kept close to the value of the underlying portfolio through arbitrage activities by a few institutional investors is called

To increase the Sharpe ratio for a portfolio,an investor would have to add which one of the following?

There has been a gradual increase in the correlations between the ________ that may be related to increased economic and financial integration.

The Sharpe ratio is measured as the ________ return relative to the ________ of the return.

The arbitrage pricing theory recognizes that the return on the market portfolio may not be the only potential source of ________ that affect the returns on equities.