Discuss how asset pricing models can be applied in an international equity context.

Theory	Define the CAPM, F&F, Carhart four factor and Five factor model	50%
Application	Using capm as an example show its application in the international finance area	30%
Limitations	Identify the problem of market cointegration and spillover effects	20%

1.Is cross-listing a popular strategy in Dubai? Discuss Advantages Why firms choose to cross-list Increased liquidity – an increase in total trading volume and a significant decrease in home market bid-ask spreads Wider shareholder base Market integration – securities of similar risk have the same expected returns when trading in two markets Corporate governance signal – “bonding” Capital needs and growth opportunities Other benefits of cross-listing Visibility/brand awareness Cross-border acquisitions The flexibility to set up stock option plans for foreign employees 50% Disadvantages Why firms decide against cross-listing Costs One-time listing and registration fees Ongoing costs of additional reporting and disclosure Relative costs – U.S. exchanges are considered prohibitively expensive by some Sarbanes-Oxley Act increased the costs of corporate governance regulations & taxations rules 3 out of 4 new DR listings in 2006 were on non-U.S. exchanges 30% Strategy Application to UAE firms- Talk about DFM and cross listing 20%