Bekaert and Harvey ["Foreign Speculators and Emerging Equity Markets," Journal of Finance, 2000] found which of the following?
A) A decrease in the country risk of an emerging market tends to be followed by a fall in equity share prices.
B) Emerging markets with high country risk tend to have higher betas than markets with low country risk.
C) Emerging markets with high country risk tend to have less volatile returns than markets with low country risk.
D) Financial market liberalizations tend to increase local firms' cost of capital.
E) Financial market liberalizations tend to increase the correlation of emerging markets with the rest of the world.

Question

Quizplus · Accepted Answer

Financial market liberalizations tend to increase the correlation of emerging markets with the rest of the world, as they become more integrated into the global financial system.