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Risks in international markets

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What are different risks that investors face when investing in international markets? How can investors minimize or eliminate these risks?

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The different risks facing an investor who is investing in international markets are:

1. Exchange rate risk - The investments in international markets are denominated in the local currency of the country and so when the investments are converted to US dollars, this would be done at the prevailing exchange rate. Thus the investor takes on added foreign exchange risk when investing in international markets

2. Liquidity - ...

Solution Summary

This solution details the risks of international investing and explains some of the strategies for minimizing these risks.

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Investing in foreign markets.

Dr. Washington had recently overheard a few of his colleagues discussing possible investments in the international marketplace. Wanting to explore all of his potential investment options, he has asked you to explain the various aspects of investing in foreign markets.

Your job is to research the following concepts and present your explanations to Dr. Washington as a formal research paper:
ââ?¬¢ Foreign investments and portfolio diversification
ââ?¬¢ Reasons to invest internationally
ââ?¬¢ International investment risks
ââ?¬¢ International investment mediums

You must provide examples of these concepts using at least two articles from the Library's full-text database. These are a few examples for article topics:
ââ?¬¢ four Asian tigers
ââ?¬¢ China's national image transformation
ââ?¬¢ government realignment

The paper must include all necessary in-text citations as well as a complete reference list formatted in APA.

Assignment Guidelines:
ââ?¬¢ Research the four international investment concepts listed in the Assignment Description.
ââ?¬¢ Find at least two articles in the Library's full-text database that provide examples for two of the concepts.
ââ?¬¢ Write a formal research paper for Dr. Washington that answers the following questions:
o What is portfolio diversification? Explain.
ïâ??§ Why are foreign investments effective at diversifying a portfolio?
o What are the main reasons to invest in international markets? Explain.
o What are the major risks associated with investing internationally?
o What are the various methods for investing in an international market?
ââ?¬¢ Compile your answers into a single Word document.
o Provide in-text citations and a complete reference list in APA format.

ââ?¬¢ A 3-4 page, double-spaced research paper that explains the four concepts of international investments listed in the Assignment Description
o At least two articles from the Library's full-text database must be used within your paper
o A complete reference list in APA format must be submitted along with your research paper

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