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发表于 2010-4-16 11:15 | 只看该作者

Reading 34: Equity: Markets and Instruments-LOS i 习题精选

domestic, div, advantages, investing, class
Session 10: Equity Valuation: Valuation Concepts
Reading 34: Equity: Markets and Instruments

LOS i: Discuss the advantages and disadvantages of the various alternatives to direct international investing.

 

 

 

George Go, CFA, a U.S. domestic investor, wishes to diversify his domestic portfolio. Which of the following investment alternatives offer the lowest diversification benefit primarily because of its high correlation to U.S. markets?

A)
 American Depository Receipts.
B)
 Closed-end country funds.
C)
 Exchange Traded Funds.


 

One of the primary disadvantages of a closed-end fund is that its NAV may be highly correlated with the U.S. stock market, which reduces the benefit of international diversification.

 

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土豆妮

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发表于 2010-4-16 11:16 | 只看该作者

George Go, CFA, a U.S. domestic investor, wishes to diversify his domestic portfolio. Which of the following investment alternatives offers the most advantageous cost structure?

A)
 Exchange Traded Funds (ETFs).
B)
 Closed-end country funds.
C)
 Open-ended country funds.

ETF’s have a lower cost structure than mutual funds since they do not have shareholder accounting expenses.

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发表于 2010-4-16 11:16 | 只看该作者

Which of the following investment alternatives to direct country investing create the most attractive arbitrage opportunities by trading in different time zones?

A)
 American Depository Receipts.
B)
 Exchange Traded Funds.
C)
 Open-end country funds.


One of the primary disadvantages of open-end country funds is that trade timing problems across different time zones can create arbitrage opportunities for astute investors. Open-end fund investors must redeem their shares by noon U.S. Eastern Standard Time due to the international market closings. The settlement for the redeemed shares occurs once the NAV for the fund is determined at the close of the domestic market exchange. The time lag between the international market closings, redemptions, and NAV determination creates cash flow problems for managers and opportunities for arbitrageurs.

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