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