Home bias refers to a the tendency to vacation in

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48. Home bias refers to A. the tendency to vacation in your home country instead of traveling abroad. B. the tendency to believe that your home country is better than other countries. C. the tendency to give preferential treatment to people from your home country. D. the tendency to overweight investments in your home country. E. none of the above. Home bias refers to the tendency to overweight investments in your home country. Difficulty: Easy Short Answer Questions 49. Discuss performance evaluation of international portfolio managers in terms of potential sources of abnormal returns. The following factors may be measured to determine the performance of an international portfolio manager. Difficulty: Moderate 25-19
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Chapter 25 - International Diversification 50. Discuss some of the factors that might be included in a multifactor model of security returns in an international application of arbitrage pricing theory (APT). Some of the factors that might be considered in a multifactor international APT model are: Difficulty: Moderate 25-20
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Chapter 25 - International Diversification 51. Marla holds her portfolio 100% in U.S. securities. She tells you that she believes foreign investing can be extremely hazardous to her portfolio. She's not sure about the details, but has "heard some things". Discuss this idea with Marla by listing three objections you have heard from your clients who have similar fears. Explain each of the objections is subject to faulty reasoning.
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