In some respects,internationally diversified portfolios are the same in principle as a domestic portfolio because
A)the investor is attempting to combine assets that are perfectly correlated.
B)investors are tying to reduce systematic risk.
C)investors are trying to reduce the total risk of the portfolio.
D)all of the above.

Question

Quizplus · Accepted Answer

The main objective of internationally diversified portfolios is to reduce the overall risk of the portfolio, which is similar to a domestic portfolio. Investors can achieve this by diversifying across different international markets and asset classes. Option A is incorrect because investors would try to combine assets that are not perfectly correlated to reduce overall portfolio risk. Option B is partially correct, but reducing systematic risk is only part of the objective; reducing total risk is the primary objective.

In Some Respects,internationally Diversified Portfolios Are the Same in Principle