--%>
Assignment Help - homework help

Describe how exchange rate fluctuations influence return

Describe how exchange rate fluctuations influence the return from a foreign market measured in dollar terms. Describe the empirical evidence on the effect of exchange rate uncertainty on the risk of foreign investment.
Mostly exchange rate fluctuations contribute to the risk of foreign investment through its own volatility as well as its covariance along with the local market returns. The covariance tends to be positive in mostly cases, implying that exchange rate changes tend to add to exchange risk, instead of offset it. Exchange risk is found to be much more important in bond investments than in stock investments.

   Related Questions in Financial Management

  • Q : Why do analysts calculate financial

    Why do analysts calculate financial ratios?

    		•
  • Q : Financial management From books of

    From books of Aggarwal Bors, following information has been extracted: Rs. Sales 2,40,000 Variable costs 1,44,000 Fixed costs 26,000 Profit before tax 70,000 Rate of tax

    		•
  • Q : Explain Capital Asset Pricing Model

    Explain Capital Asset Pricing Model (CPM).

    		•
  • Q : International fianncial management what

    what are factors responsible for the recent surge in international portfolio investment

    		•
  • Q : Basic operation of a currency forward

    Describe the basic operation of a currency forward market The forward market is an OTC market in which the forward contract for purchase or sale of foreign currency is tailor-made among the client and its international bank. No money changes ha

    		•
  • Q : Explain standard model is the lognormal

    For equities the standard model is the lognormal model, if there are many more ‘standard’ models within fixed income. Does it matter?

    		•
  • Q : Calculate rate of return of investment

    Assume you are a euro-based investor who just sold Microsoft shares which you had bought six months ago. You had invested 10,000 euros to purchase Microsoft shares for $120 per share; the exchange rate was $1.15 per euro. You sold the stock for $135 per share

    		•
  • Q : Compute the cross-rates Calculate a

    Calculate a cross-rate matrix for the French franc, Japanese yen, German mark, and the British pound. Use the most current European term quotes to compute the cross-rates so that the triangular matrix result is alike to the portion above the diagonal .The cross-rate formul

    		•
  • Q : Stock dividends and splits affect

    Explain in detail stock dividends and stock splits affect the common stock’s market price. Also explain why a firm declares stock dividends and stock splits?

    		•
  • Q : Question on optimal weights Assume you

    Assume you are interested in investing in the stock markets of 7 countries that means France, Canada, Japan, Germany, Switzerland, the United Kingdom, and the United States. Particularly, you would like to solve out for the optimal (tangency) portfolio compris

    		•