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International Diversification Chapter 25 Background Global market US Market is 40% - 49% of all markets Improved access & technology New instruments Emphasis for our investigation Risk assessment Diversification 215­2 Issues What are the risks involved in investment in foreign securities? How do you measure benchmark returns on foreign investments? Are there benefits to diversification in foreign securities? 215­3 Foreign Exchange Risk Foreign Exchange Risk Variation in return related to changes in the relative value of the domestic and foreign currency. Total return = investment return & return on foreign exchange It’s not possible to completely hedge a foreign investment. 215­4 Returns with Foreign Exchange Return in US is a function of two factors: 1. Return in the foreign market 2. Return on the foreign exchange 215­5 ... - tailieumienphi.vn
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