Section 13

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Nov 24, 2024

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Section 13: Global Considerations 61. How does the international version of CAPM (ICAPM) differ from the traditional CAPM? a) It includes only market risk b) It accounts for differences in exchange rates c) It assumes a constant risk-free rate globally d) It ignores the impact of inflation 62. In a global context, how might political instability in a country impact the application of CAPM? a) It increases the market risk premium b) It decreases the risk-free rate c) It leads to a decrease in beta values d) It introduces additional country risk 63. What challenges might arise when applying CAPM to emerging markets? a) Emerging markets have no impact on CAPM b) Limited availability of market data c) Emerging markets have lower beta values d) CAPM is more accurate in emerging markets 64. How does the use of different currencies in international investments affect the risk-free rate in CAPM? a) It has no impact on the risk-free rate b) It leads to adjustments in the risk-free rate based on exchange rates c) It decreases the risk-free rate d) It increases the risk-free rate 65. According to ICAPM, how is currency risk typically addressed in the context of asset pricing? a) It is ignored in the calculation b) It is incorporated through the beta coefficient c) It is factored into the risk-free rate d) It is considered a separate risk factor
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