Question

نه ت ہے Rank the following four investments in increasing order of historical risk. Art, T-bills, corporate bonds, and common stock T-bills, common stock, corporate bonds, art Corporate bonds, T-bills, common stock, art Common stock, corporate bonds, T-bills, art T-bills, corporate bonds, common stock, art نه نه ف ہے نه An ETF (exchange traded fund): Is priced once a day at the opening of trading Is priced once a day at the close of trading. Is priced continuously during the trading day. Is priced at the open and close of trading. None of the above. نے ل Which of the following are reasons that U.S. investors should consider foreign markets when constructing global portfolios. a. Ignoring foreign markets reduced their choices of investment opportunities. Foreign markets have low correlations with U.S. markets. Returns on non-U.S. stocks can substantially exceed returns for U.S securities. All of the above. None of the above. 4. In order to diversify risk an investor must have investments that have correlations with other investments in the portfolio that are low positive zero negative any of the above none of the above 5. Correlations between bond markets in different countries have been changing over time because Countries are developing closer trade and economic links. Countries are becoming more segmented. There are fewer barriers to travel. U.S. investors are purchasing more foreign securities. Correlations between bond markets of different countries have been rising. All of the following are ways to invest in real estate except Real Estate Investment Trusts (REITS) Raw Land Land Development Rental Properties All of the above are ways to invest in real estate. udo

Answer 1

1]

T-bills are risk free securities, and have the lowest risk.

Corporate bonds are more risky than T-bills, but less risky than common stock.

Art has the highest risk because it's returns are highly uncertain and its liquidity is low.

The answer is (e)

2]

An ETF is a mutual funds whose units are traded like shares on a stock exchange. Therefore its price is available at all times during the trading hours.

The answer is (c)

3]

(d) - all of the above.

Foreign markets expand the available investment opportunities.

Foreign markets have low correlation with US markets, thus providing diversification benefits.

Emerging markets and other high-growth economies can generate higher returns for stocks than US markets

4]

(d) - any of the above.

By adding investments which have low, zero or negative correlation with the existing portfolio, the overall risk of the portfolio can be reduced. If the investments have low or negative correlation, then their prices are less likely to move together, thereby reducing the overall volatility of the portfolio