In a perfect and integrated financial market, investors can reduce or even eliminate the currency risk exposures of their portfolios through their own portfolio hedging and diversification strategies.

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In a perfect and integrated financial market, investors have access to a wide range of financial instruments and assets denominated in different currencies, allowing them to diversify their portfolios and reduce their exposure to currency risk through various hedging techniques. This is because currency risk arises from the fluctuation in exchange rates between two currencies, and in an integrated market, there should be no restrictions on exchange or convertibility of currencies, making it easier for investors to manage their currency exposures.

In a Perfect and Integrated Financial Market, Investors Can Reduce