Portfolio risk and U.S. Investors
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A. U.S. investor has a portfolio of French, German, Italian, and Dutch bonds. Is this portfolio less risky in U.S. dollar terms now that the euro is the common currency of Europe, since the portfolio is now only exposed to a single exchange rate rather than to four exchange rates for the franc, mark, lira, and guilder?
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Portfolio risk
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Yes, it definately is less risky because it is much easier to manage foreign exchange fluctuation risk for one currency rather than ...
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