Question 1

The performance of an internationally-diversified portfolio may be affected by

Accepted Answer

A)  country selection.
B)  currency selection.
C)  stock selection.
D)  All of the options are correct.E) B) and D)
F) None of the above

Question 2

The yield on a 1-year bill in the U.K.is 7%, and the present exchange rate is 1 pound = Cad $1.65.If you expect the exchange rate to be 1 pound = Cad $1.45 a year from now, the return a Canadian investor can expect to earn by investing in U.K.bills is

Accepted Answer

A)  -6.7%.
B)  3.2%.
C)  8%.
D)  -5.97%.E) None of the above
F) A) and B)

Question 3

The interest rate on a 1-year Canadian security is 8%.The current exchange rate is C$ = US $0.78.The 1-year forward rate is C$ = US $0.76.The return (denominated in U.S.$)  that a U.S.investor can earn by investing in the Canadian security is

Accepted Answer

A)  3.59%.
B)  4.00%.
C)  5.23%.
D)  8.46%.E) C) and D)
F) None of the above

Question 4

The manager of Quantitative International Fund uses EAFE as a benchmark.Last year's performance for the fund and the benchmark were as follows: 
Calculate Quantitative's currency selection return contribution.

Accepted Answer

A)  +20%
B)  -5%
C)  +15%
D)  +5%E) B) and D)
F) A) and B)

Question 5

Assume there is a fixed exchange rate between the Canadian and U.S.dollar.The expected return and standard deviation of return on the U.S.stock market are 18% and 15%, respectively.The expected return and standard deviation on the Canadian stock market are 13% and 20%, respectively.The covariance of returns between the U.S.and Canadian stock markets is 1.5%. If you invested 50% of your money in the Canadian stock market and 50% in the U.S.stock market, the standard deviation of return of your portfolio would be

Accepted Answer

A)  12.53%.
B)  15.21%.
C)  17.50%.
D)  18.75%.E) B) and C)
F) None of the above

Question 6

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 above
F) B) and C)

Question 7

__________ are mutual funds that invest in one country only.

Accepted Answer

A)  ADRs
B)  ECUs
C)  Single-country funds
D)  All of the options are correct.E) C) and D)
F) B) and D)

Question 8

Using the S&P 500 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 41% of world equities.E) A) and B)
F) A) and C)

Exam 25: International Diversification

The yield on a 1-year bill in the U.K.is 7%, and the present exchange rate is 1 pound = Cad $1.65.If you expect the exchange rate to be 1 pound = Cad $1.45 a year from now, the return a Canadian investor can expect to earn by investing in U.K.bills is

Correct Answer
verified

__________ are mutual funds that invest in one country only.

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

Correct Answer
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The manager of Quantitative International Fund uses EAFE as a benchmark.Last year's performance for the fund and the benchmark were as follows: Calculate Quantitative's currency selection return contribution.

Correct Answer
verified

Using the S&P 500 portfolio as a proxy of the market portfolio

Correct Answer
verified

The interest rate on a 1-year Canadian security is 8%.The current exchange rate is C$ = US $0.78.The 1-year forward rate is C$ = US $0.76.The return (denominated in U.S.$) that a U.S.investor can earn by investing in the Canadian security is

Correct Answer
verified

The performance of an internationally-diversified portfolio may be affected by

Correct Answer
verified

Exam 25: International Diversification

The yield on a 1-year bill in the U.K.is 7%, and the present exchange rate is 1 pound = Cad $1.65.If you expect the exchange rate to be 1 pound = Cad $1.45 a year from now, the return a Canadian investor can expect to earn by investing in U.K.bills is

Correct AnswerverifiedShow Answer

__________ are mutual funds that invest in one country only.

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

Correct AnswerverifiedShow Answer

The manager of Quantitative International Fund uses EAFE as a benchmark.Last year's performance for the fund and the benchmark were as follows: Calculate Quantitative's currency selection return contribution.

Correct AnswerverifiedShow Answer

Using the S&P 500 portfolio as a proxy of the market portfolio

Correct AnswerverifiedShow Answer

The interest rate on a 1-year Canadian security is 8%.The current exchange rate is C$ = US $0.78.The 1-year forward rate is C$ = US $0.76.The return (denominated in U.S.$) that a U.S.investor can earn by investing in the Canadian security is

Correct AnswerverifiedShow Answer

The performance of an internationally-diversified portfolio may be affected by

Correct AnswerverifiedShow Answer

Correct Answer
verified

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verified

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verified

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verified

Correct Answer
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