The Straightforward Generalization of the Simple CAPM to International Stocks

question 7

Multiple Choice

The straightforward generalization of the simple CAPM to international stocks is problematic because

• A)inflation-risk perceptions by different investors in different countries will differ as consumption baskets differ.
• B)investors in different countries view exchange-rate risk from the perspective of different domestic currencies.
• C)taxes, transaction costs, and capital barriers across countries make it difficult for investors to hold a world-index portfolio.
• D)All of the options are correct.

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Definitions:

Developmental Stages

Specific phases through which an individual passes as they grow and mature, each characterized by distinct psychological or physical attributes.

Joan Erikson

A psychologist who collaborated extensively with her husband, Erik Erikson, contributing to the field of human development, particularly regarding the stages of psychosocial development.

Adolescence

Stage of life commonly defined as the onset of puberty when sexual maturity or the ability to reproduce is attained.

Middle-Age

A period in a person's life typically ranging from about 45 to 65 years old, characterized by transitions in physical, emotional, and social aspects.