Errunza, Hogan, and Hung ["Can the Gains from International Diversification

question 36

Multiple Choice

Errunza, Hogan, and Hung ["Can the Gains from International Diversification be Achieved Without Trading Abroad?" Journal of Finance, 1999] found that ______.

• A) the benefits of international diversification have remained fairly constant over time.
• B) the benefits of international diversification to U.S. investors depends on the proportion of foreign stocks held in the investors' portfolios.
• C) U.S. investors can replicate the diversification benefits of foreign market returns with securities that are already traded in the United States.
• D) U.S. investors need to invest directly in foreign markets to fully achieve the benefits of international diversification.
• E) None of the above

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Definitions:

Measurement Principle

An accounting principle that determines the specific basis on which economic events are recognized and quantified.

Monetary Unit Assumption

An accounting principle that assumes transactions and events can be expressed in stable units of money, facilitating their comparison and measurement.

Property Tax

Property tax is a levy on property that the owner is required to pay to the government in which the property is situated.

Selling Price

The amount for which a product or service is sold to customers, determining the revenue generated from sales.