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Q: How does the diversification of a portfolio change its expected returns and

How does the diversification of a portfolio change its expected returns and expected risks? Is this in principle any different for internationally diversified portfolios?

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Q: When you are constructing your portfolio, you know you want to

When you are constructing your portfolio, you know you want to include Cementos de Mexico (Mexico), but you cannot decide whether you wish to hold it in the form of ADRs traded on the NYSE, or directl...

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Q: Explain how currency swaps can hedge foreign exchange operating exposure. What

Explain how currency swaps can hedge foreign exchange operating exposure. What are the accounting advantages of currency swaps?

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Q: Firms with operations and assets across the globe, true MNEs,

Firms with operations and assets across the globe, true MNEs, are in many ways as international in composition as the most internationally diversified portfolio of unrelated securities. Why do investo...

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Q: As the newest member of the asset allocation team in your firm

As the newest member of the asset allocation team in your firm, you constantly find yourself being quizzed by your fellow group members. The topic is international diversification. One analyst asks yo...

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Q: Conceptually, how do the Sharpe and Treynor performance measures define risk

Conceptually, how do the Sharpe and Treynor performance measures define risk differently? Which do you believe is a more useful measure in an internationally diversified portfolio?

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Q: The key to managing operating exposure at the strategic level is for

The key to managing operating exposure at the strategic level is for management to recognize a disequilibrium in parity conditions when it occurs, and to be prepositioned to react most appropriately....

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Q: The benefits of portfolio construction, domestically or internationally, arise from

The benefits of portfolio construction, domestically or internationally, arise from the lack of correlation among assets and markets. The increasing globalization of business is expected to change the...

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Q: When asked why they do not internationally diversify their portfolios, answer

When asked why they do not internationally diversify their portfolios, answer that “the risks are not worth the expected returns.” Using the theory of international diversification, how would you eval...

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Q: If the primary benefit of portfolio diversification is risk reduction, is

If the primary benefit of portfolio diversification is risk reduction, is the investor always better off choosing the portfolio with the lowest expected risk?

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