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Multinational companies, international portfolio diversification are known to offer more
opportunities than a domestic portfolio. Further, they have more stable returns despite
having more diffuse risk.
Required:
A. What factors are responsible for the recent surge in international portfolio
investment?
B. Explain the main barriers to international portfolio diversification.
C. Discuss the advantages and disadvantages of investing in emerging economies.
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- Identify an economic crisis or turning point that had significant impacts to certain industries in the U.S. market. Explain why investing in international markets can be a good strategy to hedge against this.Why is maintaining a portfolio that contains foreign securities considered a good long-term investment strategy?Discuss how the following hinder or become barriers to international diversification of portfolios of investment. Segmented markets Lack of liquidity Exchange rate controls Less developed capital marketsIn one sense, international investing may be viewed as no more than a straight-forward generalisation of portfolio selection in a domestic market on the other hand, international investments pose problems not encountered in domestic markets. (a) Discuss the above statement in detail highlighting the similarities and differences between domestic and international investing. Identify the challenges and problems of international investing. (b) Outline and explain the advantages of international investing. (c) Outline and explain the disadvantages of international investing.
- Investing imbalance in global markets is a process of international diversification with the asset allocation, theoretically, the benefits of this portfolio strategy may include ( ).A higher SD (Standard Deviation); B lower SD; C higher Sharpe ratio; D lower Sharpe ratio; E broader asset options. (Many answers are valid)III. A globally diversified portfolio faces a lower market risk than a domestically diversified portfolio. Examine the above statement with reference to possible benefits of international diversification. Use an appropriate graph to illustrate.After the global financial crisis, are investors operating in the securities markets more cautious in making investment decisions, or do they more thoroughly analyze the investment risk of investing in capital markets?
- Discuss the following barriers to international diversification. 1. Segmented markets2. Lack of liquidity3. Exchange rate controls4. Less developed capital markets5. Exchange rate risk6. Lack of informationWhich of the following statements is the MOST accurate? A) International trade in assets can make both parties to the trade better off by allowing them to reduce the riskiness of return by portfolio diversification. B) International trade in assets can make both parties to the trade worse off by allowing them to increase the riskiness of return by portfolio diversification. C) International trade in assets can make both parties to the trade worse off by allowing them to eliminate all risk by portfolio unification. D) International trade in assets can make both parties to the trade better off by allowing them to eliminate all risk by portfolio unification. do not plagiarise please thnkuInvestment advisors recommend risk reduction through international diversification. International investing allows you to take advantage of the potential for growth in foreign economies, particularly in emerging markets. Janice Wong is considering investment in either Europe or Asia. She has studied these markets and believes that both markets will be influenced by the U.S. economy, which has a 19% chance for being good, a 48% chance for being fair, and a 33% chance for being poor. Probability distributions of the returns for these markets are given in the accompanying table. State of the U.S. Economy Returna in Heturns in Europe 16 31 Asia Good 24 Fair Poor -41 a. Find the expected value and the standard deviation of returns in Europe and Asia. (Round intermediate calculations to at least 4 decimal places and final answers to 2 decimal places.) Europe Asia Expected value Standard deviation
- Investment advisors recommend risk reduction through international diversification. International investing allows you to take advantage of the potential for growth in foreign economies, particularly in emerging markets. Janice Wong is considering investment in either Europe or Asia. She has studied these markets and believes that both markets will be influenced by the U.S. economy, which has a 21% chance for being good, a 52% chance for being fair, and a 27% chance for being poor. Probability distributions of the returns for these markets are given in the accompanying table. Return Rates in Europe: Good, 10%; Fair, 4%; Poor, -3% Return Rates in Asia: Good, 24%; Fair, 4%; Poor, -18% a. Find the expected value and the standard deviation of returns in Europe and Asia. (Round intermediate calculations to at least 4 decimal places and final answers to 2 decimal places.)why should investors consider constructing global portfolios? As part of your response, be sure to address currency fluctuation concerns.Made sure you differentiate portfolio investments from FDI. Can we argue that a "A closed economy, however, is entirely self-sufficient", or if it is, at what costs? An open economy is one that engages in international trade of goods, services, and financial assets. An open economy participates in a variety of trade activities with foreign nations. A country's market can be expanded in a way that a closed economy can never do. It buys shares, debentures, bonds, and other types of securities from foreign nations and sells them to countries abroad. Normal people of an open economy are free to travel and work wherever they wish in that economy's domestic boundaries. A closed economy, however, is entirely self-sufficient, which implies that neither imports nor exports ever leave the nation. The objective of a closed economy is to provide all domestic consumers' needs from inside its boundaries. It does not import goods or services from other nations or export goods or services to them.…