Question 46

Dollar vs. Time Weighted Returns: Time weighted rates of return are fundamentally the internal

rate of return (IRR) while the dollar weighted returns are the geometric average rate of return.

True

False

Question 47

Commodity Cost of Carry: The commodity cost of carry is similar to the financial cost of carry

except that storage costs are added in the place of dividends: F = S (1 + RF + C)^T, where the

latter term in parenthesis is the cost of carry.

True

False

Question 48

Economic Value Added: EVA is the spread between ROC and the COC and measures the return

in excess of the opportunity cost. Stern Stewart, the human resources consulting firm, uses the

term residual income to describe EVA and in the HR function, it can be used as a hurdle rate for

bonuses.

True

False

Question 49

International Risk: Exchange rate risk imparts an extra source of uncertainty to investments

dominated in foreign currencies. To this end, political risk in international markets is generally a

risk factor as well. International equities are generally subdivided into developed and emerging

markets

True

False