Why Is Investing in Foreign Companies an Effective Way to Diversify

question 27

Multiple Choice

Why is investing in foreign companies an effective way to diversify an individual's investment portfolio?

• A)Foreign economies are stronger than the U.S.economy.
• B)Foreign stocks are less risky than the stocks of U.S.corporations.
• C)Stock returns of companies in foreign companies are highly correlated with stock returns of U.S.companies.
• D)Returns on foreign company stocks do not always change in the same direction as returns on U.S.stocks.

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Definitions:

Refilled

The act of filling something again after it has been depleted or emptied, such as refilling a water bottle.

Earth's Life Support

The natural systems and processes that sustain life on Earth, including the atmosphere, hydrosphere, lithosphere, and biosphere.

Free-access Resource

Natural resources that are available to everyone, often leading to overuse and depletion because no one has the exclusive right to use them.

Global Common Resources

Natural resources not owned by any one nation and accessible to all, such as the oceans, the atmosphere, and space.