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LOS k: Explain the effect of market segmentation on the ICAPM.
Q1. Suppose world markets are fully segmented. What will be the effect of segmentation of the international capital asset pricing model (ICAPM)? Risk will be priced:
A) differently in each national market and the ICAPM will be valid.
B) differently in each national market and the ICAPM breaks down.
C) similarly in each national market and the ICAPM breaks down.
Q2. For the international capital asset pricing model (ICAPM), which of the following is TRUE regarding the integration of national markets? If international markets are:
A) segmented, the ICAPM breaks down.
B) integrated, there is no need for the ICAPM.
C) integrated, the ICAPM breaks down.
Q3. If international markets are integrated, which of the following statements is FALSE?
A) The international risk-free rate will be the appropriate base rate for asset pricing.
B) Risk will be priced similarly in all markets.
C) The international capital asset pricing model will be valid. | 
发表于 2009-4-2 13:58
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