The Straightforward Generalization of the Simple CAPM to International Stocks

question 21

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
• E)None of the options

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Definitions:

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A clear and unobstructed passageway for air to move in and out of the lungs.

Cyanosis

Bluish discoloration of skin and mucous membranes caused by reduced oxygen in blood

Clubbing

A physical condition characterized by bulbous enlargement of the ends of one's fingers or toes, often indicating underlying health issues, such as lung disease.

Pinkish Coloured Frothy

Descriptive of a foam or fluid that is light red to pink in color, often indicative of a specific medical condition or bodily reaction.