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Chap025 - Multiple Choice Questions 1 Shares of several...

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Multiple Choice Questions 1. Shares of several foreign firms are traded in the U.S. markets in the form of A) ADRs B) ECUs C) single-country funds D) all of the above E) none of the above Answer: A Difficulty: Easy Rationale: American Depository Receipts (ADRs) allow U. S. investors to invest in foreign stocks via transactions on the U.S. stock exchanges. 2. __________ refers to the possibility of expropriation of assets, changes in tax policy, and the possibility of restrictions on foreign exchange transactions. 3. __________ are mutual funds that invest in one country only.
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4. The performance of an internationally diversified portfolio may be affected by 5. Over the period 2001-2005, most correlations between the U.S. stock index and stock- index portfolios of other countries were A) negative B) positive but less than .9 C) approximately zero D) .9 or above E) none of the above Answer: B Difficulty: Moderate Rationale: Correlation coefficients were typically below .9, while correlations between well-diversified U. S. market portfolios were typically above .9. See Table 25.10. 6. The __________ index is a widely used index of non-U.S. stocks.
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Chapter 25 International Diversification 7. The __________ equity market had the highest average local currency return between 2001 and 2005. 8. The __________ equity market had the highest average U.S. dollar return between 2001 and 2005.
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