Podcast
Questions and Answers
Which of the following is a risk faced by an investor when investing in a foreign currency denominated bond?
Which of the following is a risk faced by an investor when investing in a foreign currency denominated bond?
- Interest rate risk
- Exchange rate risk (correct)
- Liquidity risk
- Credit risk
If an Indian investor purchases a dollar-denominated bond and the rupee appreciates against the US dollar, what will be the impact on the investor's returns?
If an Indian investor purchases a dollar-denominated bond and the rupee appreciates against the US dollar, what will be the impact on the investor's returns?
- The investor's returns will not be affected.
- The impact cannot be determined without additional information.
- The investor will receive fewer rupees than expected. (correct)
- The investor will receive more rupees than expected.
What is the term used to describe the uncertainty of returns caused by the possibility of a major change in the political or economic environment in a country?
What is the term used to describe the uncertainty of returns caused by the possibility of a major change in the political or economic environment in a country?
- Sovereign risk
- Political risk (correct)
- Geopolitical risk
- Exchange rate risk
What is the term used to describe the risk associated with wars, terrorist acts, and tensions between states that affect the normal and peaceful course of international relations?
What is the term used to describe the risk associated with wars, terrorist acts, and tensions between states that affect the normal and peaceful course of international relations?
When investing in countries with unstable political-economic systems, what should an investor include in their required rate of return?
When investing in countries with unstable political-economic systems, what should an investor include in their required rate of return?
What is the primary benefit of a globally diversified portfolio for investors?
What is the primary benefit of a globally diversified portfolio for investors?
