A) invest about 60% of their money in foreign stocks.
B) invest the same percentage of their money in foreign stocks that foreign equities represent in the world equity market.
C) frequently hedge currency exposure.
D) both a and b.
E) none of these.
G) A) and D)
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A) it will raise her risk relative to the risk she would face just holding U.S.stocks.
B) she can reduce its risk relative to the risk she would face just holding U.S.stocks.
C) she will increase her expected return,but must also take on more risk.
D) it will have no significant impact on either the risk or the return of her portfolio.
E) she needs to seek professional management because she doesn't have access to international stocks on her own.
G) D) and E)
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A) the East Asia Foreign Equity index.
B) the Economic Advisor's Foreign Estimator index.
C) the European and Asian Foreign Equity index.
D) The Eastern Asian and French Equity index.
E) the European,Australian,Far East index.
G) D) and E)
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A) 12.5%
B) -12.5%
C) 11.25%
D) -1.25%
E) 1.25%
EAFE: (.30) (10%) + (.10) (5%) + (.60) (15%) = 12.5%;Da Gama: (.25) (10%) + (.25) (5%) + (.50) (15%) = 11.25%;Loss of 1.25% relative to EAFE.
G) C) and D)
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A) negative
B) positive
C) positive for stocks and negative for bonds
D) negative for stocks and positive for bonds
E) none of these
G) A) and C)
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A) differences in accounting for depreciation
B) differences in contingency reserve practices
C) differences in tax reporting practices
D) differences in calculating the number of shares used to compute P/E ratios
E) all of these.
G) All of the above
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A) 3.27%
B) 1.45%
C) 1.045%
D) 0.045%
E) none of these
G) None of the above
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A) results from changes in the exchange rates in the currencies of the investor and the country in which the investment is made.
B) can be hedged by using a forward or futures contract in foreign exchange.
C) cannot be eliminated.
D) a and c.
E) a and b.
G) B) and D)
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A) 1.0%
B) -1.0%
C) 3.0%
D) 0.25%
E) none of these.
G) None of the above
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A) is appropriate because U.S.securities represent more than 60% of world equities.
B) is appropriate because most U.S.investors are primarily interested in U.S.securities.
C) is appropriate because most U.S.and non-U.S.investors are primarily interested in U.S.securities.
D) is inappropriate because U.S.securities make up less than 50% of world equities.
E) is inappropriate because the average U.S.investor has less than 20% of her portfolio in non-U.S.equities.
G) C) and D)
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A) less than 2%
B) between 3% and 4%
C) between 5% and 7%
D) between 7% and 8%
E) greater than 8%
G) D) and E)
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A) are passively managed.
B) are shares that can be sold by investors.
C) are free from brokerage commissions.
D) a and b
E) a,b,and c
G) D) and E)
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A) ADRs
B) ECUs
C) single-country funds
D) all of these
E) none of these
G) C) and E)
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A) less than 0,greater than 0
B) greater than 0,less than 0
C) less than 0.8,greater than 0.8
D) greater than 0.8,less than 0.8
E) less than 0,less than 0
G) A) and E)
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A) Japanese
B) Chinese
C) U.K.
D) Canadian
E) none of these
G) A) and C)
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A few of the factors students may mentio...View Answer
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A) inflation risk perceptions by different investors in different countries will differ as consumption baskets differ
B) investors in different countries view exchange rate risk from the perspective of different domestic currencies
C) taxes,transaction costs and capital barriers across countries make it difficult for investor to hold a world index portfolio
D) all of these
E) none of these.
G) A) and C)
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A) cannot be measured against a passive benchmark,such as the TSX Composite.
B) can be measured against a widely used index of non-U.S.stocks,the EAFE index (Europe,Australia,Far East) .
C) can be measured against international indexes computed by Morgan Stanley,Salomon Brothers,First Boston and Goldman,Sachs,among others.
D) b and c.
E) none of these.
G) C) and E)
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A) international equity markets move completely independently.
B) a world factor seems to be present in the returns of all countries.
C) there is no value in international diversification.
D) both a and c are true.
E) all of these are true.
G) All of the above
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A) -1.88%
B) .09%
C) 1.91%
D) 3.95%
E) none of these
G) None of the above
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