Empirical studies find that emerging market returns tend to have ??______.
A) lower volatilities than developed market returns
B) lower correlations with the world market portfolio than developed market returns
C) less political risk than developed market returns
D) More than one of the above
E) None of the above

Question

Quizplus · Accepted Answer

Empirical studies have found that emerging market returns tend to have lower correlations with the world market portfolio than developed market returns. This is due to factors such as the unique risks and characteristics of emerging markets, as well as the limited integration of these markets with the global financial system. However, it is not necessarily true that emerging market returns have lower volatilities or less political risk than developed market returns, as these factors can vary significantly depending on the specific country or region being examined.

Empirical Studies Find That Emerging Market Returns Tend to Have