Investing in Global Markets Quiz

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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?

Expected return and risk exposure Signup and view all the answers

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

To adjust data for comparability Signup and view all the answers

What does the expected return on an investment include?

Potential price appreciation over some period Signup and view all the answers

What is the purpose of risk analysis?

To find securities with superior expected returns in the presence of domestic and international risks Signup and view all the answers

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

Both a and b Signup and view all the answers

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

Perceiving major factors influencing stocks returns Signup and view all the answers

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

Both a and c Signup and view all the answers

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

To make an adjustment for meaningful comparison across companies Signup and view all the answers

Why is quantifying risk analysis important for investment organizations?

To find securities with superior expected returns in the presence of domestic and international risks Signup and view all the answers

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

Economic activity, interest rates, energy costs, and general market conditions Signup and view all the answers

What is the objective of security analysis?

To determine relative misevaluation of investments within the same industry Signup and view all the answers

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

Global industrial sectors, country-to-country basis, and style investing Signup and view all the answers

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

Difficulty to obtain relevant information Signup and view all the answers

Investing in Global Markets Quiz

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