Thestandard deviationis evaluated in the context of:

Market

CAPM

SPI

TPI

Confidence Intervals

Question 2

Awidestandard deviation implies more risk per unit of expected return.

True

False

Question 3

Foreign Portfolio standard deviationswill be less than the squared sum deviations offsandfxas long as the _________ is _______.

Corr(fx,m) < 1

Corr(fs,m) > -1

Corr(fx,m) > -1

Corr(fs,fx) > -1

Corr(fs,m) < 1

Corr(fs,fx) < 1

Question 4

The description ofFP#1in theInstructions, indicates thatMitsuistock trades on the __________ stock exchange.

Question 5

According to theInstructions,FP#1is held by a ________(Japanese,American, Malaysian) investor.

Question 6

The description ofFP#2in theInstructions, indicates that Matsui trades on the __________ stock exchange.

Question 7

According to the Instructions,FP#2is held by a ________ (Japanese,MalaysianorAmerican) investor.

TOTAL RISK

Standard Deviation

Question 8

The correct currency quote expression for theMalaysianinvestor in Japan, i.e.FP#1, is:

JPY/USD

MYR/USD

JPY/MYR

MYR/JPY

Question 9

Construct the ROPC need for determining thestandard deviationof theforeign currencyinvestment,fx#1.Fill in the blanks with the relevant ROPC.

ROPC₁=

ROPC₂=

:

ROPC₇=

ROPC₈=

Question 10

Thestandard deviationoffx#1is equal to:

Question 11

Thestandard deviationoffs#1, i.e.alongposition in Matsui Stock, is based on the ROPC. Fill in the blanks with:

ROPC₁=

ROPC₂=

:

ROPC₈=

Question 12

Thestandard deviationof Matsui stock for theMalaysianinvestor is equal to ______.

Question 13

There is a99%certainty that thelowestreturn Matsui will earn over the holding period isa)and thehighestb).

Question 14

The relevantcorrelationfor determining the standard deviation ofForeign Portfolio #1is:

Corr (Matusi, MYR/JPT)

Corr (FP#1, FM#1)

Corr (Matusi, JPY/MYR)

Corr ({Matusi & MYR/JPY}, FM)

Corr ({Matusi & JPY/MYR}, FM)

Question 15

The excel solution for the relevantcorrelationfor evaluating the total risk ofFP#1is:

Question 16

Thetotal riskofFP#1for theMalaysianinvestor's position is:

Question 17

Thecorrect currency quoteexpression for theJapaneseinvestor in Malaysia, i.e.FP#2, is_______.

JPY/MYR

JPY/USD

MYR/JPY

MYR/USD

Question 18

Construct the ROPC need for determining thestandard deviationof theforeign currencyinvestment,fx#2.Fill in the blanks with the relevant ROPC.

ROPC₁=

ROPC₂=

ROPC₇=

ROPC₈=

Question 19

Thefx#2,is equal to:

Question 20

Thestandard deviationoffs#2,requires the ROPC as an input.Fill in the blanks with the appropriate ROPC.

ROPC₁=

ROPC₂=

:

ROPC₇=

ROPC₈=

Question 21

Thefs#2is equal to:

Question 22

The relevantcorrelationfor determining the total risk ofFP#2is between the ROPC fora) __________ and the ROPC forb) ________.

Question 23

The solution for the relevantcorrelationfor the standard deviation ofFP#2is:

Question 24

Thestandard deviationofFP#2is:

Question 25

Thecorrelationsfor bothFP#1andFP#2can be characterized as:

Good because both provide significant risk reduction

Good because they are both low relative to domestic correlations

Poor because neither provides significant risk reduction

Poor because they are both low relative to domestic correlations

Poor because neither is negative

Good because both are positive

Question 26

Observe the solutions for the total risk ofFP#1andFP#2.We can say that:

FP#1 has higher risk-adjusted returns than FP#2

Not enough information to answer

FP#1 and FP#2 are approximately equal investments with regard to total risk

FP#2 has higher risk-adjusted returns than FP#1