Risk sharing through asset trade internationally is limited because:
A) not all capital assets can be traded internationally, and the number of assets is comparatively small.
B) laws prohibit many kinds of international investment.
C) returns on international assets are usually lower.
D) there is a larger risk of currency devaluation.

Question

Quizplus · Accepted Answer

Not all capital assets can be easily traded internationally and the number of assets that can be traded is limited. This restricts the ability to share risk through asset trade. Laws and regulations may also limit international investment, but this is not the main limiting factor for risk sharing through asset trade. Returns on international assets may be lower, but this is not a limiting factor for sharing risk through asset trade. While currency devaluation does present a risk, it is not the primary factor limiting risk sharing through asset trade.

Risk Sharing Through Asset Trade Internationally Is Limited Because