1.Which of the following is a determinant of value for a closed-end country fund? The level of:

A)   local taxes imposed by the country government.

B)   foreign investment restrictions imposed by the country government.

C)   inflation in the country.

D)   real interest rates in the country.

2.The market price of closed-end country funds (or its Net Asset Value) are NOT generally determined by:

A)   supply and demand for the fund’s shares.

B)   fundamental value of the fund’s underlying shares.

C)   level of foreign investment restrictions imposed by the country.

D)   the country’s absolute purchasing power parity.

3.Closed-end country funds trading in U.S. markets have been known to be affected by:

A)   strong correlations to U.S. markets, thus providing for more diversification benefits than expected.

B)   strong correlations to U.S. markets, thus providing for less diversification benefits than expected.

C)   weak correlations to U.S. markets, thus providing for less diversification benefits than expected.

D)   weak correlations to U.S. markets, thus providing for more diversification benefits than expected.

1.Which of the following is a determinant of value for a closed-end country fund? The level of:

A)   local taxes imposed by the country government.

B)   foreign investment restrictions imposed by the country government.

C)   inflation in the country.

D)   real interest rates in the country.

The correct answer was B)

The determinants of value for a closed-end country fund include the value of the underlying securities held within the fund and the level of foreign investment restrictions imposed by the emerging country governments.Funds investing in countries will investment restrictions tend to trade at a premium to NAV.

2.The market price of closed-end country funds (or its Net Asset Value) are NOT generally determined by:

A)   supply and demand for the fund’s shares.

B)   fundamental value of the fund’s underlying shares.

C)   level of foreign investment restrictions imposed by the country.

D)   the country’s absolute purchasing power parity.

The correct answer was D)

The market price of a closed-end country fund is determined by the supply and demand for shares of the fund. The determinants of value for a closed-end country fund include the value of the underlying securities held within the fund and the level of foreign investment restrictions imposed by the emerging country governments.

3.Closed-end country funds trading in U.S. markets have been known to be affected by:

A)   strong correlations to U.S. markets, thus providing for more diversification benefits than expected.

B)   strong correlations to U.S. markets, thus providing for less diversification benefits than expected.

C)   weak correlations to U.S. markets, thus providing for less diversification benefits than expected.

D)   weak correlations to U.S. markets, thus providing for more diversification benefits than expected.

The correct answer was B)

Closed-end funds’ values have been found to be strongly correlated with the U.S. stock market. Strong or higher degrees of correlations provide less diversification benefits.