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    Risk of Finance, Portfolio, Investments

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    1) What are unique risks associated with foreign investments? How might an investor protect his/her portfolio against these risks? Is it possible to protect a portfolio from all types of risk? Explain your answer.

    2) Does international diversification enhance risk reduction? Why or why not? What measures can be taken to reduce the risks of international portfolio investing?

    3) Why would a portfolio manager pursue active versus passive management techniques? Why would a portfolio manager pursue active versus passive management techniques? Is it ever preferable to use a passive portfolio management technique? Why or why not?

    4) What is an efficient portfolio? How are the return and standard deviation of a portfolio determined? How must assets be evaluated to achieve a minimum variance portfolio? Explain your answer.

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    https://brainmass.com/business/international-finance/risk-of-finance-portfolio-investments-131893

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    1) What are unique risks associated with foreign investments? How might an investor protect his/her portfolio against these risks? Is it possible to protect a portfolio from all types of risk? Explain your answer.
    The unique risks associated with foreign investments:
    1. The risk of foreign exchange fluctuation;
    2. The risk that the funds would not be repartriated;
    3. The risk of political turbulence leading to seizure of investments;
    Possible to protect portfolio:
    1. There can be protection against foreign exchange risk by purchasing forward contracts for foreign exchange.
    2. There can be protection against risks of repartrication by selecting a country which has a repatriation treaty with the parent country.
    3. There can be protection against risk of turbulence by selecting a politically stable country for investment.

    2) Does international diversification enhance risk reduction? Why or why not? What measures can be taken to reduce the risks of international portfolio investing?
    Not really, international diversification cannot enhance risk reduction because the ...

    Solution Summary

    Risk of Finance, Portfolio, Investments is discussed very comprehensively in this explanation..

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