If a Nation Diversifies Its Capital Portfolio So That It

question 88

Multiple Choice

If a nation diversifies its capital portfolio so that it owns some foreign capital and foreigners own a percentage of the nation's capital, then:

• A) domestic returns will be lower.
• B) domestic returns will be higher.
• C) domestic returns will equal international returns.
• D) the nation will earn an average return, and its consumption will remain stable in the event of output shocks.

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Definitions:

Earnings Per Share

Earnings per share (EPS) is a financial ratio that indicates the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of profitability.

Reacquired Shares

Shares that were issued and subsequently bought back by the issuing company from the stock market or shareholders.

Common Stock

A type of equity security that represents ownership in a company, providing voting rights and dividends to shareholders.

Stockholders' Equity

The remaining interest in a corporation's assets once all debts have been subtracted.