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Reading 60: An Introduction to Security Valuation: Part II

1.hich of the following statements regarding a country risk premium is TRUE?

A)   Country risk arises from expected economic and political events.

B)   Countries with large or active capital markets offer significant liquidity risk.

C)   Exchange rate risk is relatively small and can be ignored.

D)   Firms in different countries assume significantly different financial risk.


2
ich of the following is NOT a risk factor for a country’s risk premium?

A)   Business risk.

B)   Financial risk.

C)   Technology risk.

D)   Exchange rate risk.


3
e country risk premium considers which of the following types of risk:

A)   interest rate risk.

B)   company-specific risk.

C)   exchange rate risk.

D)   dollar risk.

答案和详解如下:

1.hich of the following statements regarding a country risk premium is TRUE?

A)   Country risk arises from expected economic and political events.

B)   Countries with large or active capital markets offer significant liquidity risk.

C)   Exchange rate risk is relatively small and can be ignored.

D)   Firms in different countries assume significantly different financial risk.

The correct answer was D)

Country risk arises from unexpected not expected economic and political events. Countries with small or inactive capital markets offer liquidity risk, not countries with large and active capital markets. Exchange rate risk must always be taken into account.


2
ich of the following is NOT a risk factor for a country’s risk premium?

A)   Business risk.

B)   Financial risk.

C)   Technology risk.

D)   Exchange rate risk.

The correct answer was C)

Technology risk is not considered a relevant risk factor in assessing a country’s risk premium.


3
e country risk premium considers which of the following types of risk:

A)   interest rate risk.

B)   company-specific risk.

C)   exchange rate risk.

D)   dollar risk.

The correct answer was C)

The country risk premium includes business, financial, liquidity, exchange rate, and country risk.

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