Please answer the two parts with correct anwers and explanations. International financial management question:

Part 1: Which of the following statements is TRUE? (I) The domestic currency return to a foreign equity market investment is approximately the sum of the foreign equity market return in foreign currency plus the bilateral currency return. (II) The volatility of the domestic currency return to foreign equity market investment is the sum of the volatility of the foreign equity market return in foreign currency plus the volatility of the bilateral currency return. (III) Emerging markets tend to be riskier compared to the frontier markets. (IV) An investor from a developed economy can enjoy diversification benefits by investing in frontier markets.

(IV) only

(I) and (IV) only

(I) and (III) only

(I), (II) and (IV) only

(I) only

Part 2:

Which of the following statements is TRUE? (I) A peso problem in the FX market implies that the market participants are irrational. (II) A peso problem in the FX market is hard to test because it reflects changes in expectations about economic fundamentals. (III) A rare disaster model can explain why we observe excess volatility and risk premia in the FX market. (IV) We cannot accurately estimate the likelihood of rare disasters, even in small samples.

(I) and (III) only

(II), (III) and (IV) only

(I) and (II) only

(II) and (IV) only

(II) and (III)

Which of the following statements is TRUE? (I) The domestic currency return to a foreign equity market investment is approximately the sum of the foreign equity market return in foreign currency plus the bilateral currency return. (II) The volatility of the domestic currency return to foreign equity market investment is the sum of the volatility of the foreign equity market return in foreign currency plus the volatility of the bilateral currency return. (III) Emerging markets tend to be riskier compared to the frontier markets. (IV) An investor from a developed economy can enjoy diversification benefits by investing in frontier markets. * (IV) only (I) and (IV) only (I) and (III) only (I), (II) and (IV) only (I) only Which of the following statements is TRUE? (I) A peso problem in the FX market implies that the market participants are irrational. (II) A peso problem in the FX market is hard to test because it reflects changes in expectations about economic fundamentals. (III) A rare disaster model can explain why we observe excess volatility and risk premia in the FX market. (IV) We cannot accurately estimate the likelihood of rare disasters, even in small samples. * (I) and (III) only (II), (III) and (IV) only (I) and (II) only (II) and (IV) only (II) and (III)