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Quiz 8 Chapter 19
and 20
Chapter 19:
___________________________________________________________________________
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1.
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In 2011, U.S.
securities represented ______ of the world market for equities.
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2.
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_____ has the highest
market capitalization of listed corporations among developed markets.
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3.
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Total capitalization
of corporate equity in the United States in 2011 was about _______
trillion.
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4.
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If you limit your
investment opportunity set to only the largest six countries in the world in
terms of equity capitalization as a percentage of total global equity
capital, you will include about _______ of the world's equity.
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5.
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Limiting your
investments to the top six countries in the world in terms of market
capitalization may make sense for _________ investor but probably does not
make sense for ________ investor.
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C.
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a security
selection expert; a market timer
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D.
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a fundamental; a
technical
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6.
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WEBS are
____________________.
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A.
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investments in
country-specific portfolios
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B.
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traded exactly like
mutual funds
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D.
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designed to give
investors foreign currency exposure to multiple countries
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7.
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Which one of the
following allows you to purchase the stock of a specific foreign
company?
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8.
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Generally speaking,
countries with ______ capitalization of equities ________.
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A.
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larger; have higher
GDP
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B.
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smaller; are
wealthier
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C.
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larger; have
smaller GDP
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D.
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larger; are
higher-growth countries
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9.
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The 32
"developed" countries with the largest equity capitalization made
up about _____ of the world GDP in 2011.
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10.
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According to a
regression of GDP on market capitalization in 2010, virtually all developed
countries had _______ per capita GDP than (as) predicted by the
regression.
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D.
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sometimes lower and
sometimes higher
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11.
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If the direct quote
for the exchange rate for the U.S. dollar versus the Canadian dollar is .98,
what is the indirect quote?
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12.
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EAFE stands for
_______.
|
A.
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Equity And Foreign
Exchange
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B.
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European,
Australian, Far East
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C.
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European, Asian,
Foreign Exchange
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D.
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European, American,
Far East
|
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13.
|
Which one of the
following country risks includes the possibility of expropriation of assets,
changes in tax policy, and restrictions on foreign exchange
transactions?
|
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14.
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The __________ index
is a widely used index of non-U.S. stocks.
|
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15.
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Suppose that U.S.
equity markets represent about 35% of total global equity markets and that
the typical U.S. investor has about 95% of her portfolio invested only in
U.S. equities. This is an example of _________.
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B.
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excessive
diversification
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16.
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The four largest
economies in the world in 2010 were ____________.
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A.
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United States,
India, China, and Japan
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B.
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United States,
China, Canada, and Japan
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C.
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United States,
China, Japan, and Germany
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D.
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China, United
Kingdom, Canada, and United States
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17.
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The proper formula
for interest rate parity is ___________.
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A.
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[1 + rf(foreign)]/[1 + rf(US)] = F1/E0
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B.
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[1 + rf(US)]/[1 + rf(foreign)] = E0/F1
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C.
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[1 + rf(US)]/[1 + rf(foreign)] = F0/E0
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D.
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[1 + rf(foreign)]/[1 + rf(foreign)] = F0/E1
|
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18.
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Research indicates
that exchange risk of the major currencies has been _________ so far in this
century.
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19.
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It appears from
empirical work that exchange rate risk ____________.
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A.
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has been declining
for individual investments in recent years
|
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B.
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is mostly
diversifiable
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C.
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is mostly
systematic risk
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D.
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is unimportant for
an investment in a single foreign country
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20.
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Passive investors
with well-diversified international portfolios _________.
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A.
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can safely ignore
all political risk in emerging markets
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B.
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can expect very
large diversification gains from their international investing
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C.
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do not need to be
concerned with hedging exposure to foreign currencies
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D.
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can expect returns
to be better than the EAFE on a consistent basis
|
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21.
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Which stock market
has the largest weight in the EAFE index?
|
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22.
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The correlation
coefficient between the U.S. stock market index and stock market indexes of
major countries is __________.
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