Developed Countries' Stock Market Returns Have Correlations to the U

question 37

Multiple Choice

Developed countries' stock market returns have correlations to the U.S. market that:

• A)are stable over the years.
• B)seem to maintain their relative rank order to each other compared to the U.S.
• C)are consistently correlated to the U.S. markets at less than 1.00.
• D)as a group, have seen their correlation decline over the last 42 years.

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Definitions:

Parent-Company Extension Method

A method in accounting where the parent company extends its financial statements to include the financial activities of its subsidiaries as if they are part of the parent company itself.

Consolidated Shareholders' Equity

The total amount of equity attributed to shareholders of the parent company and its subsidiaries, after eliminating intra-group transactions and balances.

Non-controlling Interest

Non-controlling interest is a portion of the equity in a subsidiary not owned directly or indirectly by the parent company, representing minority shareholders' interest in the subsidiary's net assets.

Equity Method

A method of accounting in which an investor recognizes its share of the profits and losses of an investee company in proportion to its ownership interest.