Adler and Simon (1986)examined the Exposure of a Sample of Foreign

question 4

Multiple Choice

Adler and Simon (1986) examined the exposure of a sample of foreign equity and bond index returns to exchange rate changes.They found that

• A)changes in exchange rates generally explained a smaller portion of the variability of foreign bond indexes than foreign equity indexes.
• B)changes in exchange rates generally explained none of the variability of foreign bond indexes but completely explained the variability in foreign equity indexes.
• C)changes in exchange rates generally explained a larger portion of the variability of foreign equity indexes than foreign bond indexes.
• D)changes in exchange rates generally explained a larger portion of the variability of foreign bond indexes than foreign equity indexes.

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Definitions:

Stockholders' Equity

Represents the residual value of a company's assets after deducting its liabilities, essentially indicating the net worth attributable to shareholders.

Ex-dividend Date

The first day on which buying a stock will not entitle the new owner to the declared dividend.

Date of Declaration

The specific date on which a company's board of directors announces the distribution of a dividend or other corporate action.

Marketable Equity Securities

Financial instruments that represent ownership in public companies and can be easily bought or sold in public stock markets.