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Foreign stock risks in terms of exchange versus country or sovereign risk

Foreign stocks may present a risk. Explain those risks in terms of exchange versus country or sovereign risk. Do you believe foreign markets are more stable than domestic markets? Explain your answer.

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Foreign Stocks:

Foreign stocks allow the investors to have many options for putting their money into. The international stocks are similar with the domestic stocks in some minor ways but hold major important differences. Foreign stock allows an individual to be exposed to the markets in other countries at different rates of risks. The currency fluctuations can affect the stock price negatively even if the economies in the foreign markets are doing well. All stocks are not the same; this is because countries around the globe vary in their social, economical and the political setup. This means, as much as an individual may want to invest in foreign stocks, they will have to decide from which side of the globe they are going to put their funds (International Stocks, 2011).

The Risks Presented By the Foreign Stock:

The investing in International stocks has risen in the past years. The opportunities that are being offered in other international markets seem to create a lot of benefits for investors compared to the domestic markets. While these opportunities are becoming more and more appealing to the portfolios of the investors, it is wise to consider the risks that come with ...

Solution Summary

The risks in terms of exchange versus country or sovereign risks are discussed. This discussion helps to determine if the foreign markets are more stable than domestic markets. The solution contains two references.

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