International Financial Management 2nd Edition-Test Bankchapter 7

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1、InternationalFinancialManagement,2e(Bekaert/Hodrick)Chapter7SpeculationandRiskintheForeignExchangeMarket7.1MultipleChoiceEasy1)Ifthereisnosystematicdifferencebetweentheforwardrateandtheexpectedfuturespotrate,thentheexpectedforwardmarketreturnshouldbe________.A)zeroB)greate

2、rthanoneC)equaltothestockholders'requiredrateofreturnD)lessthanonebutgreaterthanzeroAnswer:AComment:Uncoveredinterestrateparityandtheunbiasednesshypothesis,p.2232)Whentheforwardrateisequaltotheexpectedfuturespotrate,theforwardrateissaidtobe________thefuturespotrate.A)aninf

3、ormationsignalforB)anunbiasedpredictorofC)ahedgeforD)inparitywiththeexpectedfuturespotrateAnswer:BComment:Theunbiasednesshypothesis,p.2253)Ifmarketefficiencyisidentifiedwithparity,currencymarketsthatare________providenoopportunitiesforcurrencytraderstoearnprofits.A)notinpa

4、rityB)inparityC)ininterestrateparityonlyD)inpurchasingpowerparityAnswer:B4)Whichoneofthefollowingwouldsomesayinvalidatestheunbiasednesshypothesis?A)theFisherEffectB)theefficientmarkethypothesisC)theSiegelparadoxD)thelawofonepriceAnswer:CComment:TheSiegelParadox(Advanced),p

5、.2265)The________onanassetistheexpectedreturnontheassetinexcessofthereturnonarisk-freeasset.A)riskpremiumB)covarianceC)systematicriskD)betaAnswer:AComment:WhatDeterminesRiskPremiums?p.2287Copyright©2012PearsonEducation,Inc.6)Theriskthatisassociatedwithanasset'sreturnarisin

6、gfromthecovarianceofthereturnwiththereturnonalarge,well-diversifiedportfolioisknownas________risk.A)businessB)exchangerateC)marketD)systematicAnswer:DComment:Systematicandunsystematicrisk,p.2287)Whatisthemarketportfolio?A)thelarge,well-diversifiedportfoliothatinvestorsshou

7、ldholdaccordingtofinancetheoryB)thelarge,well-diversifiedportfoliowithoutinternationalsecuritiesC)theportfoliothatrepresentsaglobalportfolioD)theportfoliowithstrictlydomesticsecuritiesAnswer:AComment:Systematicandunsystematicrisk,p.2288)Becausesystematicriskmeasureshowmuch

8、anasset'sreturnco-moveswiththemarket,it________.A)canbediversifiedawaywiththeappropriateh