FIN 720Professor BrosowskiHomework 15December 3, 2019Chapter 15 Homework1.Hong Kong stocks are two times more volatile than US stocks but I don't think this is a reason to not make any investments in Hong Kong. By investing in a diversified portfolio, Hong kong and US will help reduce the risk on investments compared to what US markets can achieve.3.Increasing integration of national capital markets cannot reduce the benefits of international diversifications. I guess it all depends on factors occurring in the market. Benefits of international diversification depends on low correlation. When international securities tend to have a low correlation,the situation leas to diversification benefits. Risk can only be diversified if international securities form a securities portfolio.4.Domestick stocks have greater correlation because correlation between stocks depend on how stock return relate to each other. Also, economic condition on all securities is important because economic movement in all securities relate to each other anf tend to have a high correlation.