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Emerging Market Question

Emerging markets are subject to periodic crisis. Most of the time, the crisis does not spread beyond the local region. True or False

During the crisis, does that increase the correlation with developed markets - True/False

Pure guesswork

1) True - based on contagion

2) False

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false

no

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True to both. The correlation is related to the volatility not the emerging market. There is a correlation between volatility between emerging and developed during times of crisis due to the volatility itself.

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true
true

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How could the first one be true? It could spread to neighboring emerging market although it may not spread to developed countries.

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first one is false

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False ( see Asia currency crisis ----->russia crisis ------------>LTCM)
True ( one of the criticism of emerging market investing)

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True to both. (Deriv - mark the word -"does not spread beyound local region"

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question from CFAI

The first question asks "most of the time" so it is true



Edited 1 time(s). Last edit at Sunday, May 29, 2011 at 11:01AM by drk.

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