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Why Is a Portfolio Including Both Domestic and Foreign Securities

Question 26

Multiple Choice

Why is a portfolio including both domestic and foreign securities likely to have a higher average yield than one only containing domestic securities?


A) Yields on foreign securities are more likely to be inversely related to yields on domestic securities.
B) Yields on foreign securities are less likely to be inversely related to yields on domestic securities.
C) Yields on foreign securities do not depend on economic conditions abroad,as do yields on domestic securities.
D) A portfolio including both foreign and domestic securities is NOT likely to have a higher average yield than one containing only domestic securities.

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