投资学第7版Test-Bank答案25

Chapter25InternationalDiversification636MultipleChoiceQuestions1.SharesofseveralforeignfirmsaretradedintheU.S.marketsintheformofA)ADRsB)ECUsC)single-countryfundsD)alloftheaboveE)noneoftheaboveAnswer:ADifficulty:EasyRationale:AmericanDepositoryReceipts(ADRs)allowU.S.investorstoinvestinforeignstocksviatransactionsontheU.S.stockexchanges.2.__________referstothepossibilityofexpropriationofassets,changesintaxpolicy,andthepossibilityofrestrictionsonforeignexchangetransactions.A)defaultriskB)foreignexchangeriskC)marketriskD)politicalriskE)noneoftheaboveAnswer:DDifficulty:EasyRationale:Alloftheabovefactorsarepoliticalinnature,andthusareexamplesofpoliticalrisk.3.__________aremutualfundsthatinvestinonecountryonly.A)ADRsB)ECUsC)single-countryfundsD)alloftheaboveE)noneoftheaboveAnswer:CDifficulty:EasyRationale:Mutualfundsthatinvestinthestocksofonecountryonlyarecalledsingle-countryfunds.Chapter25InternationalDiversification6374.TheperformanceofaninternationallydiversifiedportfoliomaybeaffectedbyA)countryselectionB)currencyselectionC)stockselectionD)alloftheaboveE)noneoftheaboveAnswer:DDifficulty:EasyRationale:Alloftheabovefactorsmayaffecttheperformanceofaninternationalportfolio.5.Overtheperiod2001-2005,mostcorrelationsbetweentheU.S.stockindexandstock-indexportfoliosofothercountrieswereA)negativeB)positivebutlessthan.9C)approximatelyzeroD).9oraboveE)noneoftheaboveAnswer:BDifficulty:ModerateRationale:Correlationcoefficientsweretypicallybelow.9,whilecorrelationsbetweenwell-diversifiedU.S.marketportfoliosweretypicallyabove.9.SeeTable25.10.6.The__________indexisawidelyusedindexofnon-U.S.stocks.A)CBOEB)DowJonesC)EAFED)alloftheaboveE)noneoftheaboveAnswer:CDifficulty:EasyRationale:TheEurope,Australia,FarEast(EAFE)indexcomputedbyMorganStanleyisawidelyusedindexofnon-U.S.stocks.Chapter25InternationalDiversification6387.The__________equitymarkethadthehighestaveragelocalcurrencyreturnbetween2001and2005.A)RussianB)NorwegianC)U.K.D)U.S.E)noneoftheaboveAnswer:ADifficulty:ModerateRationale:SeeTable25.9.8.The__________equitymarkethadthehighestaverageU.S.dollarreturnbetween2001and2005.A)RussianB)FinnishC)ColumbianD)U.S.E)noneoftheaboveAnswer:CDifficulty:ModerateRationale:SeeTable25.9.9.The__________equitymarkethadthehighestaverageU.S.dollarstandarddeviationbetween2001and2005.A)TurkishB)FinnishC)IndonesianD)U.S.E)noneoftheaboveAnswer:ADifficulty:ModerateRationale:SeeTable25.9.10.The__________equitymarkethadthehighestaveragelocalcurrencystandarddeviationbetween2001and2005.A)TurkishB)FinnishC)IndonesianD)U.S.E)noneoftheaboveAnswer:ADifficulty:ModerateRationale:SeeTable25.9.Chapter25InternationalDiversification63911.In2005,theU.S.equitymarketrepresented__________oftheworldequitymarket.A)19%B)60%C)43%D)39%E)noneoftheaboveAnswer:DDifficulty:ModerateRationale:SeeTable25.1.12.ThestraightforwardgeneralizationofthesimpleCAPMtointernationalstocksisproblematicbecause__________.A)inflationriskperceptionsbydifferentinvestorsindifferentcountrieswilldifferasconsumptionbasketsdifferB)investorsindifferentcountriesviewexchangerateriskfromtheperspectiveofdifferentdomesticcurrenciesC)taxes,transactioncostsandcapitalbarriersacrosscountriesmakeitdifficultforinvestortoholdaworldindexportfolioD)alloftheaboveE)noneoftheabove.Answer:DDifficulty:ModerateRationale:AlloftheabovefactorsmakeabroadgeneralizationoftheCAPMtointernationalstocksproblematic.13.Theyieldona1-yearbillintheU.K.is8%andthepresentexchangerateis1pound=U.S.$1.60.Ifyouexpecttheexchangeratetobe1pound-U.S.$1.50ayearfromnow,thereturnaU.S.investorcanexpecttoearnbyinvestinginU.K.billsisA)-6.7%B)0%C)8%D)1.25%E)noneoftheaboveAnswer:DDifficulty:ModerateRationale:r(US)=[1+r(UK)]F0/E0-1;[1.08][1.50/1.60]-1=1.25%.Chapter25InternationalDiversification64014.Supposethe1-yearrisk-freerateofreturnintheU.S.is5%.Thecurrentexchangerateis1pound=U.S.$1.60.The1-yearforwardrateis1pound=$1.57.Whatistheminimumyieldona1-yearrisk-freesecurityinBritainthatwouldinduceaU.S.investortoinvestintheBritishsecurity?A)2.44%B)2.50%C)7.00%D)7.62%E)noneoftheaboveAnswer:CDifficulty:ModerateRationale:1.05=(1+r)X[1.57/1.60]-1;r=7.0%.15.Theinterestrateona1-yearCanadiansecurityis8%.ThecurrentexchangerateisC$=US$0.78.The1-yearforwardrateisC$=US$0.76.Thereturn(denominatedinU.S.$)thataU.S.investorcanearnbyinvestingintheCanadiansecurityis__________.A)3.59%B)4.00%C)5.23%D)8.46%E)noneoftheaboveAnswer:CDifficulty:ModerateRationale:1.08[0.76/0.78]=x-1;x=5.23%.16.Supposethe1-yearrisk-freerateofreturnintheU.S.is4%andthe1-yearrisk-freerateofreturninBritainis7%.Thecurrentexchangerateis1pound=U.S.$1.65.A1-yearfutureexchangerateof__________forthepoundwouldmakeaU.S.investorindifferentbetweeninvestingintheU.S.securityandinvestingtheBritishsecurity.A)1.6037B)2.0411C)1.7500D)2.3369E)noneoftheaboveAnswer:ADifficulty:ModerateRationale:1.04/1.07=x/1.65;x=1.6037.Chapter25InternationalDiversification64117.ThepresentexchangerateisC$=U.S.$0.78.TheoneyearfuturerateisC$=U.S.$0.76.Theyieldona1-yearU.S.billis4%.Ayieldof__________ona1-year__________Canadianbillwillmakeinvesto