With imperfect substitutability,investors will hold more foreign assets only if they are compensated for risks.

Question

Quizplus · Accepted Answer

With imperfect substitutability, investors cannot simply switch between domestic and foreign assets, which means they will hold more foreign assets only if they are compensated for the additional risks (such as currency fluctuations, political instability, etc.) that come with investing in foreign markets.

With Imperfect Substitutability,investors Will Hold More Foreign Assets Only If