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Diversified international investment offers investors higher expected returns and / or reduced
risks vis - & - vis exclusively. Domestic investment. Here we will discuss the sources and sizes of
these gains from venturing overseas for, portfolio investment. Which is investment in equities and
with the question that I never have the answer!Bonds where the investor 's holding is too small to provide any effective control.
The Advantages of International Portfolio. Diversification
1. Spreading risk: Correlations between national asset markets
Because of risk aversion investors demand,, Higher expected returns for taking on investments
with greater risk. It is a well-established proposition in portfolio theory. That whenever there is
.Imperfect co-relation between different assets', returns risk is reduced by maintaining only a
portion of wealth in any. Individual asset. More generally by selecting, a portfolio according to
expected returns variances of returns and co-relations,,, Between returns an investor, can achieve
minimum risk for a given expected portfolio return or maximum, expected portfolio. Return for a
given risk.,, Furthermore ceteris paribus the lower are the co-relations between returns on
different assets the greater, are the benefits. Of portfolio diversification.
International Journal of Marketing Financial Services, & Management Research _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _. ISSN 2277 - 3622
Vol.2 No. 4 April (,, 2013)
Online available at 19 www.indianresearchjournals.com
.Because of different industrial structure in, different countries and because different economies
do not trace out exactly. The same business cycle there are, reasons for smaller co-relations of
expected returns between investments in numerous. Different countries than between investments
within any one country. This means that foreign investments offer diversification. Benefits that
.Cannot be enjoyed by investing only, at home and for example that a, US investor might include
British stocks in a portfolio. Even if they offer lower expected returns than US stocks; the benefit
.Of risk reduction might more than compensate for lower expected re distribution international investments. Distribution of international investment Can help investors who have expectations in terms of high yield benefit as follows.Because.
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