asset and currency correl

When investing in foreign markets Sims and Davis should be aware of the correlation between the asset and currency. In developed and emerging markets, what is the typical correlation between the asset and currency? Developed Emerging A) Negative Positive B) Positive Negative C) Positive Positive


B? Since emerging markets tend to be more export driven?

A. Emerging market countries tend to be positively correlated w/their currency; opposite for developed.


I’ll go with A



A also- just woke up. Let’s start this day off right. Coffee made, check. CFA 2009 mock, I’m coming for you this AM… just give me about 20 minutes to mess around on the internet.

A is correct. I will save you the reasons Schweser offered.

Why A???

bannisja - where are you accessing the 2009 cfa mock? i didn’t know previous cfa mocks were available.

I’ll go with A. Think about it today, U.S dollar is increased yet its stock market returns are poor (think about it a few years ago as well, when the U.S markets were killing it yet currency fell to decade-lows). Opposite for emerging economies, so with more investment into their currency, more could be put to work in the market, so currency appreciates as does the stock market.