International Portfolio Investment

The focus of this paper is to analyze the feasibility of international portfolio diversification for a potential US investor with a moderate risk aversion. The first section includes the benefits of international portfolio investment with a special emphasis on the diversification aspect. The changes in correlations over different periods are discussed and the investments time horizon importance is stressed. The second section presents the additional costs incurred by maintaining an internationally diversified portfolio, including the risks and constraints involved. The conclusion contains a set of recommendations for a potential investor interested in internationally diversifying his portfolio.

Provided by: Romanian-American University Topic: Data Management Date Added: Jun 2011 Format: PDF

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