Summarize the Most Important Benefits and Risks Associated with Diversification

question 83

Essay

Summarize the most important benefits and risks associated with diversification into global markets.

---

Definitions:

Investment-Banking Firm

A financial institution that assists individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities.

Underwriting Syndicate

A group of investment banks that work together to issue new securities to the market, sharing the risk and responsibility of selling the offering.

Margin Call

A demand by a broker that an investor deposits further cash or securities to cover possible losses on trades.

Initial Margin

The minimum amount of capital required to open a new position in a securities account.