Foreign Securities Are Generally Considered to Be More Risky Than

question 18

Essay

Foreign securities are generally considered to be more risky than domestic securities.Given this assumption,explain how adding foreign securities into a domestic portfolio can affect the Markowitz efficient portfolios.

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Definitions:

Tax-exempt Bonds

Bonds issued by governmental entities or certain non-profits that do not require the bondholder to pay taxes on the interest earned, making them an attractive investment option.

Charitable Contributions

Donations made to qualified organizations that may be deductible from taxable income if itemized.

Travel Expenses

Travel expenses are costs associated with traveling for the purpose of conducting business, deductible under IRS regulations.

DRD

Dividends-Received Deduction, a tax deduction that U.S. corporations receive for dividends distributed by other corporations in which they have an ownership stake.