1. When forecasting stock market returns, the Grinold-Kroner model specifically accounts for all of the following except:
A. An increase in nominal corporate earnings growth
B. An increase in real corporate earnings growth
C. A decrease in buyback yield (or a decrease in shares outstanding)
D. Expectations of P/E compression or expansion
E. Consumer confidence levels
2. Which of the following relationships is (are) most likely TRUE:
I. USD vs. WTI prices have a positive correlation
II. WTI vs. Emerging Market equity markets have a positive correlation
III. As data frequency decreases, correlation strength decreases
IV. As foreign sales (as a percentage of total sales) increases for SP500 companies, the correlation between US equity markets and foreign equity markets will decrease
A. I
B. II
C. III
D. IV
E. II, IV