ch13 - CHAPTER 13 INTERNATIONAL PORTFOLIO INVESTMENT EASY...

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CHAPTER 13 INTERNATIONAL PORTFOLIO INVESTMENT EASY 13.1 Which one of the following is an advantage of international investing? a. you can invest in industries that don't exist in the United States b. you can invest in companies that have lower price-earnings ratios c. you can invest in companies that are, on average, more profitable than similar U.S. firms d. you can invest in companies with lower market-book value ratios ANSWER: a: international diversification 13.2 While there is systematic risk within a nation, it may be ______ and diversifiable outside the country after constructing a global portfolio. a. temporary b. somewhat temporary c. non-systematic d. permanent ANSWER: c: correlations and the gains from diversification 13.3 The efficient frontier is the set of portfolios that has the ________ standard deviation for its level of expected return. a. smallest possible b. greatest possible c. most feasible d. least correlated ANSWER: a: correlations and the gains from diversification 13.4 The lack of ________ , the ability to buy and sell securities efficiently, is a major obstacle on some overseas exchanges. a. diversification b. foreign ownership c. liquidity d. solvency ANSWER: c: barriers to international diversification 13.5 The total dollar return on a foreign security can be decomposed into a. dividend/interest income b. capital gains (losses). c. currency gains (losses). d. all of the above ANSWER: d: measuring the total return from foreign portfolio investing
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13.6 ________ are certificates of ownership by a U.S. bank as a convenience to investors in lieu of the underlying shares it holds in custody. a. Emerging market indexes b. Regional funds c. American depository receipts d. American derivative claims ANSWER: c: barriers to international diversification 13.7 Instead of buying foreign stocks overseas, investors wishing to diversify internationally can buy foreign equities traded in the United States in the form of a. currency futures contracts b. foreign stock options c. interest rate swaps d. American Depository Receipts ANSWER: d: barriers to international diversification 13.8 In the past investing in emerging markets offered _______ risk and _________ returns. a. the highest, the highest b. the lowest, the highest c. the highest, the lowest d. the lowest, the lowest ANSWER: a: investing in emerging markets 13.9 One of the barriers to international diversification is the lack of information that is not readily __________ nor ___________ for global investors.
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  • Fall '13
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  • Investing, United States dollar, foreign portfolio investing

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