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Reasons for internationally diversifying one's portfolio across asset classes

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What are some important reasons for internationally diversifying one's portfolio across asset classes? How could it affect the stabilization of returns and lowering of volatility? Provide examples of foreign markets and their associated risk level.

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This solution outlines some of the reasons for internationally diversifying one's portfolio across asset classes.

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There are several important reasons for internationally diversifying one's portfolio across asset classes. The market portfolio is the most efficient portfolio. It provides the highest return per unit of risk. A true market portfolio is one that contains all possible stocks and investment opportunities that exist. Thus, the more international ...

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