Question

question 1

Some benefits of holding foreign equity compared to just holding domestic equity in a portfolio include...

Group of answer choices

Greater opportunity for higher returns

Greater protection against domestic inflation

Loss in Value from exchange rate risk

Greater diversification

question 2

Countries can be classified into emerging market based on whether ____

Group of answer choices

The country does not have a democracy

Only if most of its citizens are considered poor and a few wealthy according to the country standards

Its investable market capitalization is low relative to its most recent GNI figures

It is located in a low- or middle-income economy as defined by the World Bank

question 3

Some ways liquidity can be measured in a country's stock market include

Group of answer choices

Number of private stocks divided by public stocks

How many industries exist in the country

Stock Prices

Turnover ratio

question 4

What are the types of American Depository Receipts (ADRs) and how are these ADRs structured?

Group of answer choices

Level II

      [ Choose ]            This type of ADR program is a private placement of equity to Qualified Institutional Buyers (QIBs).            The most basic type of ADR program. The issuer is not seeking to raise new equity capital in the U.S. and/or cannot list on NASDAQ.            The issuer is not seeking to raise new equity capital in the U.S. and ADRs can be listed on NASDAQ, AMEX, or NYSE.            The Issuer floats a public offering of new equity in the U.S. and lists the ADRs on NASDAQ, AMEX, or NYSE      

Level I

      [ Choose ]            This type of ADR program is a private placement of equity to Qualified Institutional Buyers (QIBs).            The most basic type of ADR program. The issuer is not seeking to raise new equity capital in the U.S. and/or cannot list on NASDAQ.            The issuer is not seeking to raise new equity capital in the U.S. and ADRs can be listed on NASDAQ, AMEX, or NYSE.            The Issuer floats a public offering of new equity in the U.S. and lists the ADRs on NASDAQ, AMEX, or NYSE      

Level III

      [ Choose ]            This type of ADR program is a private placement of equity to Qualified Institutional Buyers (QIBs).            The most basic type of ADR program. The issuer is not seeking to raise new equity capital in the U.S. and/or cannot list on NASDAQ.            The issuer is not seeking to raise new equity capital in the U.S. and ADRs can be listed on NASDAQ, AMEX, or NYSE.            The Issuer floats a public offering of new equity in the U.S. and lists the ADRs on NASDAQ, AMEX, or NYSE      

Rule 144A

      [ Choose ]            This type of ADR program is a private placement of equity to Qualified Institutional Buyers (QIBs).            The most basic type of ADR program. The issuer is not seeking to raise new equity capital in the U.S. and/or cannot list on NASDAQ.            The issuer is not seeking to raise new equity capital in the U.S. and ADRs can be listed on NASDAQ, AMEX, or NYSE.            The Issuer floats a public offering of new equity in the U.S. and lists the ADRs on NASDAQ, AMEX, or NYSE   

question 5

The typical benchmarks to measure performance of stocks and portfolios are_________

Group of answer choices

World Equity Benchmarks (WEBS)

Indexes

Country Funds

Global Registered Shares (GRS)

Exchange Traded Funds (ETFs)

Answer 1

question 1

Greater opportunity for higher returns - This is correct. Investing beyond the domestic market opens up opportunities for investing in higher-growth markets.

Greater protection against domestic inflation - This is correct. Investing beyond the domestic market opens up opportunities for investing in higher-growth markets, which can help beat domestic inflation.

Loss in Value from exchange rate risk - This is incorrect. This is a cost, not a benefit.

Greater diversification - This is correct. Investing in foreign equity provides diversification benefit because the returns of foreign equity have low correlation with returns of domestic equity.