Question:Evaluatethefollowing statement:"Adding a high riskemerging market bond to a portfolio can actuallyreduce overall portfoliorisk."

a)This statement istruebecause the correlations between emerging and developed market instruments are low, zero or negative.

b)This statement isfalsebecause a high risk bond from a high risk market is too much to derive significant benefits.

c)This statement isinconclusivebecause we don't know if the market is integrated or segmented.

d)The statement istruebut under the condition that the high risk emerging bondshould only represent a small portion of a long term portfolio.

e)This statement isfalsebecause the bond must show evidence oflower risk markets.

Question 2

3pts

Check all answersthat are consistent withunsystematic factorsthat affectTreasury bondswhen priced in asegmented market.

a)Domestic economic growth as measured by growth in GDP.

b)Domestic interest rate movements

c)Global risk

d)Global economic growth as measured by growth in GDP.

e)Gobal interest rate movements

f)Domestic country risk

g)T-bonds do not have exposure to unsystematic risk in segmented market only in integrated markets.

Question 3

4pts

Thebetaof a security's ROPC:(select all true responses)

a)A measure of security return elasticity.

b)A measure of systematic + unsystematic risk.

c)A measure of total risk.

d)measures unsystematic risk.

e)measures the magnitude of the security's response to changes inthe market.

f)measures the entire range of possible outcomes over a given period of time.

g)Slope of a least squares regression.

h)A measure of systematic risk.

i)measures the magnitude of the security's response to changes inother securities.

j)measures the volatility.

Question 4

4pts

Thestandard deviationof a security's ROPC:(select all true responses)

a)measures the magnitude of the security's response to changes in other securities.

b)measures the magnitude of the security's response to changes in the market.

c)measures the entire range of possible outcomes over a given period of time.

d)None of the above.

e)Slope of a least squares regression.

f)A measure of systematic risk.

g)A measure of systematic + unsystematic risk.

h)A measure of total risk.

i)A measure of security return elasticity.

j)measures unsystematic risk.

k)measures the volatility.

Question 5

3pts

The appropriate label for thestandard deviationisa)__________and the appropriate label forbetaisb)

Possible Labels:%,X,DC/FC,FC/DC)