All of the Following Are Reasons for Caution When Considering

question 84

Multiple Choice

All of the following are reasons for caution when considering investing in emerging markets EXCEPT:

• A)in rapidly growing economies, expectations of future growth are already reflected in stock prices.
• B)economies experiencing rapid growth typically experience a dilution effect.
• C)fees for investing in funds that specialize in emerging markets tend to be higher than other funds.
• D)most economists expect the economies of emerging markets to grow more slowly than that of more advanced economies.

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Definitions:

Financial Leverage

The use of borrowed funds to finance the acquisition of assets, with the expectation that the income or capital gains from the assets will exceed the cost of borrowing.

Cash Ratio

A liquidity metric that measures a company's ability to pay off short-term liabilities with its cash and cash equivalents.

Debt/Equity Ratio

An index reflecting financial leverage through a company's total debts divided by the equity of its shareholders.

Financial Statement Analysis

The process of examining financial statements to assess a company's financial health and make investment decisions.