Investing in Global Markets Quiz
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Questions and Answers

Why is global industry analysis important for valuing companies?

  • To analyze and evaluate competitive forces that will affect returns (correct)
  • To gain familiarity with the operations, trading mechanisms, costs, and constraints of foreign markets
  • To understand the differences in national accounting standards affecting the raw information used for comparability
  • To produce information about expected return and risk exposure

What is one of the challenges encountered when investing in foreign stocks?

  • Evaluating risk exposure
  • Gaining familiarity with the operations, trading mechanisms, costs, and constraints of foreign markets (correct)
  • Measuring the expected return on investment
  • Understanding the differences in national accounting standards

What should the portfolio manager's investment approach be when investing in foreign stocks?

  • Global (correct)
  • National
  • Regional
  • Local

What does international company analysis aim to produce?

<p>Expected return and risk exposure (B)</p> Signup and view all the answers

Why is understanding differences in national accounting standards important when analyzing international companies?

<p>To adjust data for comparability (B)</p> Signup and view all the answers

What does the expected return on an investment include?

<p>Potential price appreciation over some period (B)</p> Signup and view all the answers

What is the purpose of risk analysis?

<p>To find securities with superior expected returns in the presence of domestic and international risks (A)</p> Signup and view all the answers

Why does information constraint pose a problem for investment organizations when obtaining information from foreign firms?

<p>Both a and b (A)</p> Signup and view all the answers

What is the main challenge faced by investment organizations in structuring their international research effort?

<p>Perceiving major factors influencing stocks returns (B)</p> Signup and view all the answers

How do investment organizations differ in their approach to international research based on their vision of the world?

<p>Both a and c (B)</p> Signup and view all the answers

What is the role of national accounting standards in investment organizations' analysis?

<p>To make an adjustment for meaningful comparison across companies (A)</p> Signup and view all the answers

Why is quantifying risk analysis important for investment organizations?

<p>To find securities with superior expected returns in the presence of domestic and international risks (B)</p> Signup and view all the answers

What are the key factors that risk sensitivity measures how much a company’s value responds to?

<p>Economic activity, interest rates, energy costs, and general market conditions (D)</p> Signup and view all the answers

What is the objective of security analysis?

<p>To determine relative misevaluation of investments within the same industry (A)</p> Signup and view all the answers

What major approaches do investment organizations use for international research based on their vision of the world?

<p>Global industrial sectors, country-to-country basis, and style investing (D)</p> Signup and view all the answers

What problem does difficulty in obtaining information from foreign firms pose for investment organizations?

<p>Difficulty to obtain relevant information (A)</p> Signup and view all the answers

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