Which of the Following Reasons Might Explain Why International Investing

question 48

Multiple Choice

Which of the following reasons might explain why international investing might offer diversification benefits?

• A)Companies operating in different countries will be affected differently by international events such as crop failures, energy prices, wars, tariffs, etc.
• B)Since the introduction of the euro, European and U.S. markets have a tendency to move in the same direction on an annual basis
• C)World markets are highly correlated to the U.S. market since the U.S. is the engine of economic growth around the world
• D)U.S. companies operating in foreign countries automatically provide the investor with diversification against foreign currency fluctuations

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Definitions:

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all units available for sale.

Conversion Cost

Direct labor cost plus manufacturing overhead cost.

Fitting Department

A specific section within a manufacturing facility where products are assembled, fitted, or finished according to specifications.

Weighted-Average Method

A cost-flow assumption used in inventory and cost of goods sold calculations that averages the costs of all similar goods available during the period.