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NEW QUESTION: 1
Nigel Holmes, CFA, is an investment manager for a small money management firm in London. All of Holmes' clients are citizens of the U.K. Holmes urges all of his clients to maintain internationally diversified portfolios. In his efforts to find undervalued securities, he is currently analyzing a Canadian company called Slapshot, Inc. Slapshot produces hockey equipment at its Canadian manufacturing facilities. About 85% of Slapshot's sales are to the U.S. market, and the remainder are domestic (i.e., in Canada). Sales have been growing at 12% per year. Last year's sales were C$68,000,000. Holmes has gathered the following market information (inflation is perfectly predictable):
* £/$ spot exchange rate = 0.8
* £/C$ spot exchange rate = 0.4
* U.K. risk-free rate = 6%
* U.K. expected inflation rate = 4%
* Canadian risk-free rate = 9%
* Canadian expected inflation rate = 7%
* U.S. risk-free rate = 4%
* U.S. expected inflation = 2%
Holmes uses the international CAPM (ICAPM) to value international investments. For Slapshot, Holmes believes that the stock's returns are sensitive to the £/C$ exchange rate. In order to apply the model, he estimates the following parameters using the £ as the base currency:
* World market risk premium = 6%
* Sensitivity of Slapshot to the world market = 1.2
* Sensitivity of Slapshot to changes in the £/C$ exchange rate = 1.4
* Holmes' expectation for the depreciation of the C$ against the £ = 2%
* The ratio of the price of the U.K. consumption basket to the Canadian consumption basket is 0.3.
Holmes adds Slapshot stock to several client portfolios at a purchase price of C$ 100. One year later, the stock is trading at C$ 122. There were no dividend payments during the year.
If Holmes uses the IC APM, the required rate of return on Slapshot is closest to:
A. 17.4%.
B. 13.2%.
C. 14.6%.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
The ICAPM (with only one foreign currency) is

AH parameters are provided in the problem statement except the foreign currency risk premium (SRP).
The SRP is calculated as expected foreign currency appreciation minus the rate differential (domestic- foreign). The problem indicates that Holmes expects the C$ to depreciate by 2% or, equivalently, to appreciate by -2%. Interest rates are 6% in the U.K. and 9% in Canada. Therefore, the SRP is 1% [= -2% appreciation minus -3% interest rate differential, or SRP = -2% - (-3%) = +1%). Plugging into the model, we get:

(Study Session 18, LOS 66.i,j)

NEW QUESTION: 2
Which two are valid macros?
A:

B:

C:

D:

A. Option A
B. Option C
C. Option B
D. Option D
Answer: A,D

NEW QUESTION: 3
A VMware vSphere 6.x Administrator is looking at the following output from esxtop on an ESXi host:

What does DAVG/cmd represent?
A. Average queue latency per command in milliseconds
B. Average device latency per command in milliseconds
C. Average guest operating system latency per command in milliseconds.
D. Average ESXi VMkernel latency per command in milliseconds
Answer: B

NEW QUESTION: 4
You plan to purchase new windows 8 tablets for you company network.
You need to ensure that tablet users are able to use the windows 8 Snap feature.
Which hardware specifications should you meet in choosing tablets?
A. monitor and video adapter that support a minimum screen resolution of 1024 x 768
B. monitor that supports at least three simultaneous touches
C. monitor that supports at least five simultaneous touches
D. monitor and video adapter that support a minimum screen resolution of 1366 x 768
Answer: D
Explanation:
http://windows.microsoft.com/en-US/windows-8/snap-apps#1TC=t1


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