标题: Reading 23: Capital Market Expectations－LOS k [打印本页]
作者: tycoon 时间: 2008-9-12 15:15 标题: 2008] Session 6－Reading 23: Capital Market Expectations－LOS k
CFA Institute Area 6: Economics
Session 6: Economic Concepts for Asset Valuation in Portfolio Management
Reading 23: Capital Market Expectations
LOS k: Discuss the risks faced by investors in emerging-market securities and the country risk analysis techniques used to evaluate emerging-market economies.
作者: tycoon 时间: 2008-9-12 15:16
Which of the following is NOT an indication of high risk in an emerging market economy?
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| B) | A high current account deficit. |
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C) | A government committed to structural reform. |
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| D) | A GDP growth rate of 3%. |
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Answer and Explanation
If a government is supportive of structural reforms necessary for growth, then the investment environment is more hospitable. Growth rates less than 4% may indicate that the economy is growing slower than the population, which can be problematic in these underdeveloped countries.
作者: tycoon 时间: 2008-9-12 15:17
Which of the following is NOT indicative of low risk in an emerging market economy?
| A) | A foreign debt level that is 50% of current account receipts. |
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B) | A foreign debt level that is 75% of GDP. |
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| C) | A current account deficit that is 2% of GDP. |
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| D) | Foreign exchange reserves are twice that of the short-term debt. |
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Answer and Explanation
Foreign debt levels greater than 50% of GDP indicate that the country may be overlevered. Debt levels greater than 200% of the current account receipts also indicate high risk. Current account deficits (roughly speaking, imports are greater than exports) greater than 4% of GDP can be problematic because the deficit must be financed through external borrowing. High risk is also indicated when foreign exchange reserves are less than the short-term debt that must be paid off in one year.
作者: tycoon 时间: 2008-9-12 15:17
Which of the following statements regarding risk in emerging market economies is least accurate?
| A) | Their undiversified nature makes them susceptible to volatile capital flows and economic crises. |
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| B) | Equity investors should focus on growth prospects and risk. |
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| C) | Many emerging countries are dependent on foreign borrowing. |
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D) | The economies are often heavily dependent on consumer durables. |
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Answer and Explanation
Small economies are often heavily dependent on the sale of commodities and their undiversified nature makes them susceptible to volatile capital flows and economic crises.
作者: zhouyp1982 时间: 2009-5-11 20:58
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