The Straightforward Generalization of the Simple CAPM to International Stocks

question 33

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.
• E) None of the options are correct.

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Definitions:

Distribution

In statistics, distribution refers to the way in which values of a variable are spread or dispersed across possible values.

Median

In statistics, the median is the value separating the higher half from the lower half of a data sample, a population, or a probability distribution.

Distribution

In statistics, the way in which values of a variable are spread or dispersed across a range, often visualized through a graph.

Variation

Variation refers to the differences or deviations seen within populations, individuals, or data points, often contributing to biodiversity and uniqueness.