While international investing can reduce risk below domestic levels, one important risk factor is not considered. What is that?

Question

Quizplus · Accepted Answer

The important risk factor not considered in international investing is foreign exchange risk, which refers to the possibility that changes in currency exchange rates can affect the value of an investment. This risk occurs because investments denominated in foreign currencies must be converted back to the investor's domestic currency, and fluctuations in exchange rates can result in a loss or gain on the investment.

While International Investing Can Reduce Risk Below Domestic Levels, One