Question 1

While there is systematic risk within a nation,it may be ______ and diversifiable outside the country after constructing a global portfolio.

Accepted Answer

A) temporary 
B) somewhat temporary 
C) non-systematic 
D) permanent 
A) temporary 
B) somewhat temporary 
C) non-systematic 
D) permanent

Question 2

A decomposition of the total dollar return of a foreign investment would NOT include which of the following?

Accepted Answer

A) dividend/interest income 
B) capital gains losses. 
C) currency gains losses. 
D) the cost of hedging 
A) dividend/interest income 
B) capital gains losses. 
C) currency gains losses. 
D) the cost of hedging

Question 3

These are markets that represent some of the smallest,but fastest-growing,economies in the world.They are referred to as

Accepted Answer

A) emerging markets 
B) frontier markets 
C) euro markets 
D) emerging market indices 
A) emerging markets 
B) frontier markets 
C) euro markets 
D) emerging market indices

Question 4

Instead of buying foreign stocks overseas,investors can buy foreign equities traded in the United States in the form of

Accepted Answer

A) American Depository Receipts 
B) American shares 
C) global funds 
D) a and b only 
A) American Depository Receipts 
B) American shares 
C) global funds 
D) a and b only

Question 5

Assume the standard deviation of the U.S.market portfolio is 18.2%,the standard deviation of the non-U.S.portion of the world portfolio is 17.1%,and the correlation between the U.S.and non-U.S.market portfolios is .47.Suppose you invest 40% of your money in the U.S.stock market and the other 60% in the non-U.S.portfolio.What is the standard deviation of your portfolio?

Accepted Answer

A) 17.7% 
B) 9.4% 
C) 15.1% 
D) 18.3% 
A) 17.7% 
B) 9.4% 
C) 15.1% 
D) 18.3%

Question 6

The efficient frontier is the set of portfolios that has the ________ standard deviation for its level of expected return.

Accepted Answer

A) smallest possible 
B) greatest possible 
C) most feasible 
D) least correlated 
A) smallest possible 
B) greatest possible 
C) most feasible 
D) least correlated

Question 7

Recent global market behavior that threatens the benefits of international portfolio diversification indicates that markets tend to be most ________ when volatility is greatest.

Accepted Answer

A) uncorrelated 
B) stable 
C) correlated 
D) unstable 
A) uncorrelated 
B) stable 
C) correlated 
D) unstable

Question 8

The SEC warned that foreign equity markets may have lower trading volumes and fewer listed companies that added risk due to

Accepted Answer

A) lack of liquidity 
B) dramatic changes in market value 
C) changes in the currency exchange rate 
D) less information 
A) lack of liquidity 
B) dramatic changes in market value 
C) changes in the currency exchange rate 
D) less information

Question 9

In its publication that spells out the risks,the SEC recommended one way to reduce the risk of dramatic changes in market value was to invest

Accepted Answer

A) for the long term 
B) for the short term 
C) using derivatives such as American Depository Receipts 
D) in foreign stock exchanges 
A) for the long term 
B) for the short term 
C) using derivatives such as American Depository Receipts 
D) in foreign stock exchanges

Question 10

Suppose an investor buys a Taiwanese bond with a face value of NT20,000,which is priced at NT$19,500 and bears a coupon of NT$1,700.At the end of the year,the investor sells the bond at a price of NT$18,030.During the year,the exchange rate goes from NT$1 = U.S.$0.0375 to NT$1 = U.S.$0.0425.What was the investor's U.S.dollar return on this bond?

Accepted Answer

A) 13.33% 
B) 4.23% 
C) -5.69% 
D) 14.67% 
A) 13.33% 
B) 4.23% 
C) -5.69% 
D) 14.67%

Question 11

Suppose you buy a share of Siemens at a price of €83.During the year,you receive a dividend of €2 and the € rises by 8%.If the stock price at yearend is €80,what was your total dollar return for the year?

Accepted Answer

A) 10.60% 
B) 6.70% 
C) 9.83% 
D) 8.43% 
A) 10.60% 
B) 6.70% 
C) 9.83% 
D) 8.43%

Question 12

International diversification provides a better risk-return trade-off than does investing solely in U.S.securities primarily because

Accepted Answer

A) many foreign industries don't exist in the U.S. 
B) there are many more securities to choose from overseas 
C) the economic cycles of nations may not be perfectly in phase 
D) the foreign securities may follow U.S.markets in their price movements 
A) many foreign industries don't exist in the U.S. 
B) there are many more securities to choose from overseas 
C) the economic cycles of nations may not be perfectly in phase 
D) the foreign securities may follow U.S.markets in their price movements

Question 13

Suppose an investor buys a Japanese bond with a coupon rate of 10% at its price of ¥1,100.The bond's face value is ¥1,000.At the end of the year,the bond is selling at ¥1,050 and the ¥ has depreciated by 10%.What is the dollar return on the bond at the end of the year?

Accepted Answer

A) -15.6% 
B) -5.91% 
C) 10.3% 
D) 15.8% 
A) -15.6% 
B) -5.91% 
C) 10.3% 
D) 15.8%

Question 14

The lack of ________ ,indicated by the ability to buy and sell securities efficiently,is a major obstacle on some overseas exchanges.

Accepted Answer

A) diversification 
B) foreign ownership 
C) liquidity 
D) solvency 
A) diversification 
B) foreign ownership 
C) liquidity 
D) solvency

While there is systematic risk within a nation,it may be ______ and diversifiable outside the country after constructing a global portfolio.

A decomposition of the total dollar return of a foreign investment would NOT include which of the following?

These are markets that represent some of the smallest,but fastest-growing,economies in the world.They are referred to as

Instead of buying foreign stocks overseas,investors can buy foreign equities traded in the United States in the form of

The efficient frontier is the set of portfolios that has the ________ standard deviation for its level of expected return.

Recent global market behavior that threatens the benefits of international portfolio diversification indicates that markets tend to be most ________ when volatility is greatest.

The SEC warned that foreign equity markets may have lower trading volumes and fewer listed companies that added risk due to

In its publication that spells out the risks,the SEC recommended one way to reduce the risk of dramatic changes in market value was to invest

Suppose you buy a share of Siemens at a price of €83.During the year,you receive a dividend of €2 and the € rises by 8%.If the stock price at yearend is €80,what was your total dollar return for the year?

International diversification provides a better risk-return trade-off than does investing solely in U.S.securities primarily because

Suppose an investor buys a Japanese bond with a coupon rate of 10% at its price of ¥1,100.The bond's face value is ¥1,000.At the end of the year,the bond is selling at ¥1,050 and the ¥ has depreciated by 10%.What is the dollar return on the bond at the end of the year?

The lack of ________ ,indicated by the ability to buy and sell securities efficiently,is a major obstacle on some overseas exchanges.

Introduction

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Analysis

The Foreign Exchange Market

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Markets

Functions of Euromarkets

The Cost of Capital for Foreign Investments

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Financing Foreign Trade

Current Asset Management and Short-Term Financing

Managing the Multinational Financial System

Filters

Exam 15: Examining International Portfolio Investing

While there is systematic risk within a nation,it may be ______ and diversifiable outside the country after constructing a global portfolio.

A decomposition of the total dollar return of a foreign investment would NOT include which of the following?

These are markets that represent some of the smallest,but fastest-growing,economies in the world.They are referred to as

Instead of buying foreign stocks overseas,investors can buy foreign equities traded in the United States in the form of

The efficient frontier is the set of portfolios that has the ________ standard deviation for its level of expected return.

Recent global market behavior that threatens the benefits of international portfolio diversification indicates that markets tend to be most ________ when volatility is greatest.

The SEC warned that foreign equity markets may have lower trading volumes and fewer listed companies that added risk due to

In its publication that spells out the risks,the SEC recommended one way to reduce the risk of dramatic changes in market value was to invest

Suppose you buy a share of Siemens at a price of €83.During the year,you receive a dividend of €2 and the € rises by 8%.If the stock price at yearend is €80,what was your total dollar return for the year?

International diversification provides a better risk-return trade-off than does investing solely in U.S.securities primarily because

Suppose an investor buys a Japanese bond with a coupon rate of 10% at its price of ¥1,100.The bond's face value is ¥1,000.At the end of the year,the bond is selling at ¥1,050 and the ¥ has depreciated by 10%.What is the dollar return on the bond at the end of the year?

The lack of ________ ,indicated by the ability to buy and sell securities efficiently,is a major obstacle on some overseas exchanges.

Introduction

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Analysis

The Foreign Exchange Market

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Markets

Functions of Euromarkets

The Cost of Capital for Foreign Investments

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Financing Foreign Trade

Current Asset Management and Short-Term Financing

Managing the Multinational Financial System

Filters