Ch 15-Fin 308

Similar to American Depository Receipts, __________ differ because they are generally traded on two or more markets outside the foreign issuer's home market.

Global Depository Receipts

At the end of the year, a 20% coupon Brazilian bond priced at its face value (R1,000) sells for R1,050. If the real depreciates by 75%, then what is the bond's end-of-the-year USD return?

-68.75%

At the beginning of the year, an investor bought one share of Sony for ¥38,720. During the year, the investor received a ¥500 dividend. At the end of the year, the share was worth ¥49,560. During the period, the exchange rate declined from ¥150/$ to ¥175/$. What was the investor's dollar return on Sony?

10.82%

If the initial price of a Taiwanese bond was NT$19,500 (Face Value: NT$20,000), the coupon income was NT$1,700, the end-of-period bond price was NT$18,030, and the NT appreciated from $0.0375/NT to $0.0425/NT, then what was the bond's total USD return during the period?

14.67%

The standard deviation of the US market portfolio is 18.20%, the standard deviation of the non-US world portfolio is 17.10%, and the correlation between the US and non-US portfolios is 0.47. If you invest 40% of your money in the US portfolio and the rest in the non-US portfolio, what is the standard deviation of your portfolio?

15.1%

If the initial price of a French bond was €850, the coupon income was €70, the end-of-period bond price was €1,000, and the ₣ devalued by 6% against the dollar, then what was the bond's total dollar return during the period?

18.33%

At the end of the year, a 15% coupon Brazilian bond priced at its face value (R1,000) sold for R950. If the real appreciated from $0.75/R to $0.85/R, then what was the bond's total dollar return during the period?

24.67%

An investor buys a 5.5% coupon Canadian bond priced at its face value: C$1,000. At the end of the year, the bond sells for C$1,100 while the C$ appreciates by 10%. What is the bond's end-of-the-year USD return?

27.1%

At the beginning of the year, you bought one share of Siemens for €83. During the year, you received a €2 dividend. At the end of the year, the share was worth €80. During the period, the exchange rate rose by 8%. What was your dollar return?

6.70%

One international diversification barrier is that information is not readily __________ nor __________ for global investors

Accessible; Comparable

__________ are US bank ownership certificates offered as a convenience to investors in lieu of the underlying shares the bank holds in custody.

American Depository Receipts

Recent global market behavior threatening international portfolio diversification benefits indicates that markets tend to be most __________ when volatility is greatest.

Correlated

__________ represent some of the smallest, but fastest-growing, economies in the world

Frontier markets

In the past, investing in emerging markets offered the __________ risk and the __________ returns.

Highest; Highest

The SEC warns that foreign markets may have lower trading volumes and fewer listed companies due to

Lack of liquidity

While there is systematic risk within a nation, it may be ___and diversifiable outside the country after constructing a global portfolio.

Non-systematic

The efficient frontier is the set of portfolios that has the ___standard deviation for its level of expected return.

Smallest possible

A foreign investment's total dollar return decomposition would not include which of the following?

The cost of hedging

International diversification provides a better risk/return trade-off than investing only in US securities because __________.

The economic cycles of nations may not be perfectly in phase

Which of the following is an international investing advantage?

You can invest in industries that dont exist in the US.