Q5. With respect to the statements regarding the valuation of the Brazilian real according to Purchasing Power Parity:
A) Doyle is correct; Rodriguez is correct.
B) Doyle is incorrect; Rodriguez is correct.
C) Doyle is correct; Rodriguez is incorrect.
Q6. With respect to the statements regarding the risks faced by investors in emerging markets:
A) Doyle is incorrect; Rodriguez is incorrect.
B) Doyle is correct; Rodriguez is incorrect.
C) Doyle is correct; Rodriguez is correct.
Q7. Which of the following emerging countries is most likely to be most successful in promoting growth?
A) Country A.
B) Country C.
C) Country B.
答案和详解如下：
Q5. With respect to the statements regarding the valuation of the Brazilian real according to Purchasing Power Parity:
A) Doyle is correct; Rodriguez is correct.
B) Doyle is incorrect; Rodriguez is correct.
C) Doyle is correct; Rodriguez is incorrect.
Correct answer is A)
Doyle is correct. When countries have low per capita income levels (as in BRIC countries), their currencies tend to be weak and below levels predicted by PPP. If the current value of the Brazilian real is $0.53 and the value predicted by PPP is $0.60, then the currency is undervalued by PPP standards.
Rodriguez is correct. As the BRIC countries mature and income rises, their currencies will appreciate and converge toward the value predicted by PPP.
Q6. With respect to the statements regarding the risks faced by investors in emerging markets:
A) Doyle is incorrect; Rodriguez is incorrect.
B) Doyle is correct; Rodriguez is incorrect.
C) Doyle is correct; Rodriguez is correct.
Correct answer is B)
Doyle is correct. Emerging countries have unstable political and social systems. For the bond investor, the primary risk is credit risk – does the country have the capacity and willingness to pay back its debt. One measure of the ability to pay is the government deficit to GDP ratio. Ratios greater than four percent do indicate substantial credit risk of the country’s bonds.
Rodriguez is incorrect. Although emerging countries have undiversified economies, their economies are often heavily dependent on the sale of commodities, not technology. In fact, emerging countries typically lag behind the developed world in terms of technological development.
Q7. Which of the following emerging countries is most likely to be most successful in promoting growth?
A) Country A.
B) Country C.
C) Country B.
Correct answer is B)
Country C is most likely to be the most successful in promoting growth in Doyle and Rodriguez’s table. It has an open economy (no tariffs), lowest currency risk, and the highest population growth. An open economy is one in which trade and capital flows freely across its borders. With an open economy, an economy gains increased access to technology, inputs, and markets. A stable macroeconomic environment promotes economic growth and is characterized by stable inflation, responsible fiscal policies, stable currency values, and accommodating governmental policies. A higher population and employment growth favors faster economic growth. Note that military expenditures as a percent of GDP are not mentioned in the review as a distinguishing characteristic of successful emerging countries.| 欢迎光临 CFA论坛 (http://forum.theanalystspace.com/) | Powered by Discuz! 7.2 |