Chapter 12
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