CFA Practice Question

There are 233 practice questions for this study session.

CFA Practice Question

To calculate the country equity premium, the sovereign yield spread which captures the general risk of the country should be adjusted for the volatility of the sovereign ______.

A. stock market
B. bond market relative to the bond market of the developed country
C. stock market relative to its bond market
D. stock market relative to the stock market of the developed country
Correct Answer: C

User Contributed Comments 5

User Comment
zeiad the volatility of the sovereign stock market is to its bond market.
johntan1979 For the formula, this represents the annualized sigma of the stock market divided by the annualized sigma of the bond market
stanevd This answer seems erroneous noting the curriculum states " volatility of the developing country equity market to that of the sovereign bond market denominated in terms of the currency of a developed market " Thus, D is the correct answer.
merc5559 D says stock market not bond market @stanevd.
cfastudypl stanevd, pls go through the notes again before attempting this question. AN, is correct.
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