In integrated markets,the covariance with the world should determine the expected return on the ________.

Question

Quizplus · Accepted Answer

The expected return on the domestic market is determined by the covariance with the world market in integrated markets. This means that if the domestic market is highly correlated with the world market, it will have a higher expected return as it is more exposed to global economic fluctuations. Therefore, the correct choice is C, the domestic market.

In Integrated Markets,the Covariance with the World Should Determine the Expected