Chapter 12

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Systematic risk refers to movements in a stock portfolio's value that are

Attributable to macroeconomic forces affecting an economy

A Eurocurrency is any currency

Banked outside of its country of origin

A ________ brings together those who want to invest money and those who want to borrow money

Capital market

The relatively low correlation between the movement of stock markets in different countries indicates that

Countries pursue different macroeconomic policies

As investors increase the number of stocks in their portfolio, the portfolio's risk

Declines rapidly in the beginning

A purely domestic capital market faces the problem of

Limited liquidity

Hedge funds _________

Make short bets on assets that they think will decline in value

When using the Euromarkets companies _________

Pay less for the loans

The cost of capital is the _________

Price of borrowing money

ABB Bank is a financial corporation located in England and uses euro as its official currency. The company borrows 1 million US dollars from a bank based in US. ABB will be at a disadvantage if

US dollar appreciates against Euro


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