Question 1

In 2009,the U.S.equity market represented __________ of the world equity market.

Accepted Answer

A)  19%
B)  60%
C)  43%
D)  33%
E)  none of the aboveF) None of the above
G) All of the above

Question 2

The __________ index is a widely used index of non-U.S.stocks.

Accepted Answer

A)  CBOE
B)  Dow Jones
C)  EAFE
D)  all of the above
E)  none of the aboveF) D) and E)
G) A) and D)

Question 3

Over the period 2000-2009,most correlations between the U.S.stock index and stock-index portfolios of other countries were

Accepted Answer

A)  negative
B)  positive but less than .9
C)  approximately zero
D)  .9 or above
E)  none of the aboveF) B) and D)
G) A) and D)

Question 4

The emerging market country with the highest average U.S.dollar equity-market excess return between 2000 and 2009 is

Accepted Answer

A)  China
B)  Columbia
C)  Poland
D)  Turkey
E)  none of the aboveF) A) and D)
G) All of the above

Question 5

When an investor adds international stocks to her U.S.stock portfolio

Accepted Answer

A)  it will raise her risk relative to the risk she would face just holding U.S.stocks.
B)  she can reduce the risk of her portfolio.
C)  she will increase her expected return, but must also take on more risk.
D)  it will have no 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 investments on her own.F) C) and D)
G) B) and D)

Question 6

The present exchange rate is C$ = U.S.$0.78.The one year future rate is C$ = U.S.$0.76.The yield on a 1-year U.S.bill is 4%.A yield of __________ on a 1-year Canadian bill will make investor indifferent between investing in the U.S.bill and the Canadian bill.

Accepted Answer

A)  2.4%
B)  1.3%
C)  6.4%
D)  6.7%
E)  none of the aboveF) B) and E)
G) C) and D)

Question 7

You are managing a portfolio that consists of U.S.equities.You have prepared a presentation to use when you discuss the possibility of adding international stocks to your client's portfolio.
- Draw a graph that shows the risk of the portfolio relative to the number of stocks held in the portfolio.
- When your client arrives,he is surprised at your suggestion that he add international stocks,but is willing to listen to your statements to justify your recommendations.State two reasons why he should consider the international stocks and briefly explain each.

Accepted Answer

The graph should look like the one that ...

Question 8

The __________ equity market had the lowest average local currency standard deviation of excess returns between 2000 and 2009.

Accepted Answer

A)  Turkish
B)  Finnish
C)  Indonesian
D)  Australia
E)  none of the aboveF) A) and E)
G) D) and E)

Question 9

The major concern that has been raised with respect to the weighting of countries within the EAFE index is

Accepted Answer

A)  currency volatilities are not considered in the weighting.
B)  cross-correlations are not considered in the weighting.
C)  inflation is not represented in the weighting.
D)  the weights are not proportional to the asset bases of the respective countries.
E)  none of the aboveF) C) and E)
G) A) and C)

Question 10

WEBS portfolios

Accepted Answer

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 CF) A) and B)
G) A) and C)

Question 11

The emerging market country with the highest average local-currency equity-market excess return between 2000 and 2009 is

Accepted Answer

A)  China
B)  Columbia
C)  Poland
D)  Turkey
E)  none of the aboveF) C) and D)
G) B) and E)

Question 12

Using the S&P500 portfolio as a proxy of the market portfolio

Accepted Answer

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 40% of world equities.
E)  is inappropriate because the average U.S.investor has less than 20% of her portfolio in non-U.S.equities.F) D) and E)
G) All of the above

Exam 25: International Diversification

The __________ index is a widely used index of non-U.S.stocks.

Correct Answer
verified

The present exchange rate is C$ = U.S.$0.78.The one year future rate is C$ = U.S.$0.76.The yield on a 1-year U.S.bill is 4%.A yield of __________ on a 1-year Canadian bill will make investor indifferent between investing in the U.S.bill and the Canadian bill.

Correct Answer
verified

Using the S&P500 portfolio as a proxy of the market portfolio

Correct Answer
verified

In 2009,the U.S.equity market represented __________ of the world equity market.

Correct Answer
verified

WEBS portfolios

Correct Answer
verified

The __________ equity market had the lowest average local currency standard deviation of excess returns between 2000 and 2009.

Correct Answer
verified

The emerging market country with the highest average local-currency equity-market excess return between 2000 and 2009 is

Correct Answer
verified

When an investor adds international stocks to her U.S.stock portfolio

Correct Answer
verified

The major concern that has been raised with respect to the weighting of countries within the EAFE index is

Correct Answer
verified

Over the period 2000-2009,most correlations between the U.S.stock index and stock-index portfolios of other countries were

Correct Answer
verified

The emerging market country with the highest average U.S.dollar equity-market excess return between 2000 and 2009 is

Correct Answer
verified

Correct Answer
verified
The graph should look like the one that ...
View Answer

Exam 25: International Diversification

The __________ index is a widely used index of non-U.S.stocks.

Correct AnswerverifiedShow Answer

The present exchange rate is C$ = U.S.$0.78.The one year future rate is C$ = U.S.$0.76.The yield on a 1-year U.S.bill is 4%.A yield of __________ on a 1-year Canadian bill will make investor indifferent between investing in the U.S.bill and the Canadian bill.

Correct AnswerverifiedShow Answer

Using the S&P500 portfolio as a proxy of the market portfolio

Correct AnswerverifiedShow Answer

In 2009,the U.S.equity market represented __________ of the world equity market.

Correct AnswerverifiedShow Answer

WEBS portfolios

Correct AnswerverifiedShow Answer

The __________ equity market had the lowest average local currency standard deviation of excess returns between 2000 and 2009.

Correct AnswerverifiedShow Answer

The emerging market country with the highest average local-currency equity-market excess return between 2000 and 2009 is

Correct AnswerverifiedShow Answer

When an investor adds international stocks to her U.S.stock portfolio

Correct AnswerverifiedShow Answer

The major concern that has been raised with respect to the weighting of countries within the EAFE index is

Correct AnswerverifiedShow Answer

Over the period 2000-2009,most correlations between the U.S.stock index and stock-index portfolios of other countries were

Correct AnswerverifiedShow Answer

The emerging market country with the highest average U.S.dollar equity-market excess return between 2000 and 2009 is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe graph should look like the one that ...View AnswerShow Answer

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verified
The graph should look like the one that ...
View Answer