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D. Analyze the effects of international portfolio diversification on an investment portfolio

e. Examine alternative investment vehicles.

f. Explain how the use of derivative securities can further enhance a portfolio's performance.

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Analyze the effects of international portfolio diversification on an investment portfolio

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d. Analyze the effects of international portfolio diversification on an investment portfolio

The major benefit of international portfolio diversification or rationale behind international investments in a portfolio is to diversify the risks or spread the risks inherent in the portfolio across several markets. As opportunities are available today to exploit attractive investment opportunities in emerging markets across the world, investors and fund managers invest in international securities to not only hedge their risks by increasing their exposure in several markets, but also try to take advantage of the significant growth opportunities offered by these markets.

International portfolio diversification helps fund managers and investors to mitigate the risks arising due to downfall in a particular economy in which assets are invested.

Even though cross country correlation is increasing due to increasing dependence of financial markets upon each other, the benefits of international ...

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