The Markowitz Portfolio Approach suggests that:
A)diversification reduces currency risk.
B)cooperation reduces currency risk.
C)currency risk cannot be reduced.
D)currency risk and transaction risk are the same things.

Question

Quizplus · Accepted Answer

The Markowitz Portfolio Approach is based on the principle of diversification, which aims to reduce risk by investing in a variety of assets. By diversifying the portfolio, investors can reduce the impact of currency risk on their overall returns. This is because currency risk affects different currencies in different ways, so by spreading investments across multiple currencies, the impact of any single currency's fluctuations is minimized. Therefore, diversification reduces currency risk.

The Markowitz Portfolio Approach Suggests That