International Diversification Provides a Better Risk-Return Trade-Off Than Does Investing

question 32

Multiple Choice

International diversification provides a better risk-return trade-off than does investing solely in U.S.securities primarily because

• A)many foreign industries don't exist in the U.S.
• B)there are many more securities to choose from overseas
• C)the economic cycles of nations may not be perfectly in phase
• D)the foreign securities may follow U.S.markets in their price movements

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Definitions:

Corporations

Businesses that are legally recognized as separate entities from their owners, having their rights and liabilities.

Single Taxation

A tax system where income is taxed only once, typically referring to how corporate profits are taxed at either the corporate or shareholder level but not both.