CHAPTER 3
SELECTING INVESTMENTS IN A GLOBAL MARKET
TRUE/FALSE QUESTIONS
(f) 1 The U.S. equity and bond markets have grown in terms of their relative size of the world equity and bond market.
(t) 2 Diversification with foreign curities can help reduce portfolio risk.
(f) 3 The total domestic return on German bonds is the return that would be experienced by an U.S. investor who owned German bonds.
(t) 4 If the exchange rate effect for Japane bonds is negative, it means that the domestic rate of return will be greater than the U.S. dollar return.
(t) 5 In the 1990s, an U.S. investor who ignores foreign markets reduces his/her investment choices to less than 50 percent of the available investment opportunities.
(f) 6 Treasury bills are long-term investments that make regular interest and principal payments.
(f) 7 A debenture is an option issued by a corporation that gives the holder the right to acquire common stock from the issuing firm at a specified price within a designated period of time.
(f) 8 Income bonds are considered as safe as debentures becau they pay higher rates of interest.
(f) 9 A Eurobond is an international bond denominated in a currency other than that of the United States.
(t) 10 Warrants are options often issued in connection with the sale of fixed income curities.
(f) 11 A call option is usually issued in conjunction with convertible bonds.
(f) 12 Yields on money market funds are often lower than yields available to individuals investing in CD's becau of the fees involved.
(t) 13 Municipal bond nominal yields are generally below comparable taxable bond yields.
(f) 14 REITS are investment companies that invest in high-quality money market instruments such as Treasury bills, high-grade commercial paper, and large CD’s.
(f) 15 It is very important when diversifying that the correlation between rates of return for various countries be high and very stable over time.
MULTIPLE CHOICE QUESTIONS
(b) 1 Which of the following statements concerning the relative values in the world equity markets is true?
a) Japan's share is greater than the United States’ share.
雪莲b) The United State's share is greater than Japan's share.
c) Japan's share is greater than the remaining world's share combined.
d) The United States and Japan account for over 85 percent of the value of the world's equity market.
e)United State’s share is greater than the remaining world’s share combined.
(d) 2 If you are considering investing in German stocks as a means to reduce the risk of your portfolio, the initial factor that you should examine is:
a) The average rate of return of the portfolio when you combine U.S. and German stocks.
b) The standard deviation of the German stocks.
c) The standard deviation of the German stocks compared to the standard deviation of U.S. stocks.
d) The correlation between the rates of return for German stocks and U.S. stocks.
e)The coefficient of variation (CV) of rates of return for German stocks versus the CV of rates of return for U.S. stocks.
(d) 3 All of the following are considered fixed income investments except
a) Corporate bonds.
b) Preferred stock.
c) Treasury bills, notes, and bonds.
d) Money market mutual funds.
e) Certificates of deposit (CDs).
(b) 4 Capital market instruments include all of the following except
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a) U.S. Treasury Securities.
b) American Depository Receipts.
c) U.S. government agency curities.
d) Municipal bonds.
e)Corporate bonds.
(d) 5 The original maturity of a United States Treasury note is
a) Zero years to five years.
b) Six months to ten years.
c) One year or less.
d) One year to ten years.
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e) Over ten years.
数学题(c) 6 The original maturity of a United States Treasury bill is
a) Zero years to five years.
b) Six months to ten years.
c) One year or less.
d) One year to ten years.
e) Over ten years.
(e) 7 The original maturity of a United States Treasury bond is
a) Zero years to five years.
b) Six months to ten years.
c) One year or less.
d) One year to ten years.
e) Over ten years.
(d) 8 Which of the following is not an U.S. government agency?
a) Federal National Mortgage Association
b) Federal Home Loan Bank
c) Government National Mortgage Association
d) Government Employees Insurance Company
e) Federal Housing Administration
(c) 9 The legal document tting forth the obligations of a bond's issuer is called
a) A debenture.
b) A warrant.拆掉思维的墙
c) An indenture.
d) The preemptive right.
e)A trustee deed.
(d) 10 All of the following are considered fixed income curities except朴妍雅
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b) Eurobonds.
c) Preferred stock.
d) Mutual funds.
