Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Security returns are found to be less correlated across countries than within a country.
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- Explain Broader Diversification Reduces Risk?arrow_forwardCountry differences, such as differences in the risk-free interest rate and differences in risk premiums across countries, can cause the cost of capital to vary across countries. The answer to this question in True. Group of answer choices True Falsearrow_forwardExplain why it might still be more efficient on a risk/reward basis to invest internationally rather than only domestically in the long run.arrow_forward
- In theory, the arbitrage opportunity does not exist. However, with the new technologies and increased globalization, could arbitrage opportunity exist in some new ways?arrow_forwardWhat is enhanced indexing? How is it different to passive or active strategies? What type of information ratio would you expect for an enhanced indexing strategy? How does this change if the strategy is either passive or active? Carefully justify your answers.arrow_forwardWhat factors are responsible for the recent surge in international portfolioinvestment?arrow_forward
- The Fisher Effect is a familiar economic theory in the domestic market. Define the Fisher Effect and explain why you think it is also appropriately applied to international marketsarrow_forwardIs it true that both sovereign and country risks are important risk factors, especially for international banks, and they are highly correlated meaning that when sovereign risk is high country risk will be high too?arrow_forwardWhen one currency declines against the dollar, it may correspond to lower inflation in the foreign country and as a result, historical operating income and ROI's will be higher. True or False ?arrow_forward
- True/ False. The International Fisher effect states that the real rates are equal across countries. Group of answer choices True Falsearrow_forwardIf a U.S.-based MNC focused completely on exporting, then its valuation would likely be adversely affected if most currencies were expected to appreciate against the dollar over time. Group of answer choices True Falsearrow_forwardWhat is the difference between technology risk and operational risk? How does internationalizing the payments system among banks increase operational riskarrow_forward
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