An Internationally Diversified Portfolio

question 40

Multiple Choice

An internationally diversified portfolio:

• A) should result in a portfolio with a lower beta than a purely domestic portfolio.
• B) has the same overall risk shape as a purely domestic portfolio.
• C) is only about 12% as risky as the typical individual stock.
• D) all of the above

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Definitions:

Asset Turnover

A financial ratio indicating how efficiently a company uses its assets to generate sales revenue.

Fair Value

An estimate of the price at which an asset would change hands between a willing buyer and seller in an arm's length transaction, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Accumulated Depreciation

Represents the total depreciation of a fixed asset over its life up to the current date.

Exchange of Assets

Transactions where one asset is traded for another, typically without the use of cash, within the scope of business activities.