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    BUS330: International Finance: Post-Topic11 (Chapter 17) International Equity Markets

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    Delisha
    This document provides information and problems for students regarding the International Equity Markets chapter of the BUS330: International Finance course. It outlines key terms related to market microstructure and reasons why companies cross-list their shares on foreign exchanges. It also asks students to calculate the expected returns and standard deviations of various international portfolios to determine which country, the UK or Spain, provides the best diversification for Australian investors.

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    BUS330: International Finance: Post-Topic11 (Chapter 17) International Equity Markets

    Uploaded by

    Delisha
    31 views2 pages
    This document provides information and problems for students regarding the International Equity Markets chapter of the BUS330: International Finance course. It outlines key terms related to market microstructure and reasons why companies cross-list their shares on foreign exchanges. It also asks students to calculate the expected returns and standard deviations of various international portfolios to determine which country, the UK or Spain, provides the best diversification for Australian investors.

    Original Description:

    IF11

    Original Title

    Post-workshop Topic11 (Ch17)

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    This document provides information and problems for students regarding the International Equity Markets chapter of the BUS330: International Finance course. It outlines key terms related to market microstructure and reasons why companies cross-list their shares on foreign exchanges. It also asks students to calculate the expected returns and standard deviations of various international portfolios to determine which country, the UK or Spain, provides the best diversification for Australian investors.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    31 views2 pages

    BUS330: International Finance: Post-Topic11 (Chapter 17) International Equity Markets

    Uploaded by

    Delisha
    This document provides information and problems for students regarding the International Equity Markets chapter of the BUS330: International Finance course. It outlines key terms related to market microstructure and reasons why companies cross-list their shares on foreign exchanges. It also asks students to calculate the expected returns and standard deviations of various international portfolios to determine which country, the UK or Spain, provides the best diversification for Australian investors.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    BUS330: International Finance

    Post-Topic11 (Chapter 17)


    International Equity Markets

    Students should study about the International Equity Markets (chapter 17) thoroughly
    to prepare Final Exam. As part of final exam preparation, students should solve
    following post-topic11 problems by employing their understandings/concepts that
    have been developed through pre-topic11 and topic11 sessions.

    Post-Topic11 Problems

    1. Market Microstructure Distinguish between the following terms:


    a. Market order versus limit order
    b. Price priority versus time priority
    c. Call market versus continuous market

    2. Foreign Market Listing and Issuance Explain why an Australian company might
    cross-list and sell its shares on a very liquid stock exchange such as the New York
    Stock Exchange?

    3. Barriers to Cross-listing What are some of the barriers to cross-listing shares in


    a foreign market?

    4. Equity market instruments What are the alternative instruments that can be
    used to raise equity from global markets?

    7. International Diversification What are the different instruments through which an


    Australian investor can diversify internationally?

    a. Assume that you are a retail investor? Would you prefer some instruments to
    others?

    b. Assume that you are an institutional investor? Would you prefer some instruments
    to others?

    1
    10. Portfolio of International Funds An Australian portfolio manager is considering
    increasing the diversification of her portfolio by investing in foreign mutual funds with
    the following features:

    Australia United Kingdom


    Spain
    Expected Return 15% 12% 6%
    Standard Deviation 10% 9% 6%
    Correlation with Australia 1.0 0.40
    0.05

    a. Compute the expected return and standard deviation of the following


    portfolios:

    Portfolio A: 25% UK, 75% Australia


    Portfolio B: 25% Spain, 75% Australia
    Portfolio C: 50% UK, 50% Australia
    Portfolio D: 50% Spain, 50% Australia
    Portfolio E: 75% UK, 25% Australia
    Portfolio F: 75% Spain, 25% Australia

    b. Based on your calculation in a) above, which country seems to offer the best
    diversification potential for Australian investors – UK or Spain?

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