ch15 - Multinational Financial Management Alan Shapiro 9 th...

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Unformatted text preview: Multinational Financial Management Alan Shapiro 9 th Edition J.Wiley & Sons Power Points by Joseph F. Greco, Ph.D. California State University, Fullerton CHAPTER 15 International Portfolio Investment Why Invest Internationally? What are the advantages of international investment? THE BENEFITS OF INTERNATIONAL EQUITY INVESTING I. THE BENEFITS OF INTERNATIONAL EQUITY INVESTING A. Advantages 1. Offers more opportunities than a purely domestic portfolio 2. Attractive investments overseas 3. Impact on efficient portfolio with diversification benefits Basic Portfolio Theory II. Basic Portfolio Theory A. What is the efficient frontier? It represents the most efficient combinations of all possible risky assets The Efficient Frontier E(r) A B Portfolio A is efficient Portfolio B is inefficient Basic Portfolio Theory The broader the diversification, the more stable the returns and the more diffuse the risk. Basic Portfolio Theory B.International Diversification 1. Risk-return tradeoff: may be greater Basic Portfolio Theory C. Total Risk 1. A Securitys Returns may be segmented into Systematic Risk can not be eliminated Non-systematic Risk can be eliminated by diversification The Benefits of Intl Diversification INTERNATIONAL DIVERSIFICATION 2. International diversification and...
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This note was uploaded on 01/24/2011 for the course FINS 5516 taught by Professor A during the Three '10 term at University of New South Wales.

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ch15 - Multinational Financial Management Alan Shapiro 9 th...

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