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:

Output

The quantity of products or services produced by a company, a sector, or an economy within a specified period.

Profit

The profit made when the income from a business operation surpasses the expenditures, costs, and taxes required to maintain that operation.

Zero Marginal Cost

Zero marginal cost describes a situation where producing one additional unit of a good or service does not increase the total cost of production.

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, which are incurred regardless of the quantity produced.