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:

Independence

The state or quality of being self-reliant and not subject to external control or support.

Big Five Personality Factors

A model describing human personality through five broad dimensions: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Self-Serving Bias

is a cognitive bias where individuals attribute positive outcomes to their own actions and negative outcomes to external factors.

Insecurity

Feelings of uncertainty or anxiety about oneself; a lack of confidence or assurance in one's abilities or worth.