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Emerging Markets- Quiz

The local stock market tends to appreciate when the value of the currency depreciates. However, In emerging markets the stock market depreciates when the value of the currency depreciates.

true or false?

There is a positive correlation between currency and market return for emerging markets, but I think you setup a trap in your question since you are implying a cause and effect.

I think it would be the reverse, stock market decline causes currency decline since investors are trying to pull out their funds.

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False, most emerging markets are export oriented...if currency depreciates, exports become cheaper, revenues should increase, stock price increases

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bpdulog Wrote:
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> There is a positive correlation between currency
> and market return for emerging markets, but I
> think you setup a trap in your question since you
> are implying a cause and effect.
>
> I think it would be the reverse, stock market
> decline causes currency decline since investors
> are trying to pull out their funds.


+1

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You are right, can you please explain why?

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Larger portion of return. 2x bond return compared to 1x or less equity return.

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Paraguay Wrote:
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> Larger portion of return. 2x bond return compared
> to 1x or less equity return.


Can you explain what you mean by this?

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Paraguay Wrote:
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> Currency movements are a much greater percentage
> of foreign bonds compared to stocks. The book
> says 2x compared to 1x or less for stocks.
>
> Ie currency return 8 stock return 8 bond return 4.
>
>
> Vol or currency also greater than vol of bond.


Reference?

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