标题: Reading 45: The Case for Inter....Diversification－LOS e [打印本页]
作者: tycoon 时间: 2008-9-18 10:54 标题: [2008] Session 17- Reading 45: The Case for Inter....Diversification－LOS e
Session 17: Portfolio Management in a Global Context
Reading 45: The Case for International Diversification
LOS e: Evaluate the potential performance and risk-reduction benefits of adding bonds to a globally diversified stock portfolio.
作者: tycoon 时间: 2008-9-18 10:55
Adding international bonds to an international stock portfolio has the potential for:
| A) | lower returns for the same amount of risk. |
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| B) | higher returns but also higher risk. |
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| C) | lower returns but also higher risk. |
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D) | higher returns for the same amount of risk. |
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Answer and Explanation
Plotting the risk return profile for international portfolios, the portfolio that includes international bonds in addition to international stocks will have higher returns for a given amount of risk.
作者: tycoon 时间: 2008-9-18 10:55
Which of the following statements with respect to international bonds is TRUE? The correlations between international bond markets are:
| A) | quite low, but the returns to bonds are too low to warrant their inclusion in an international portfolio. |
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| B) | high, but the returns to bonds are sufficient to warrant their inclusion in an international portfolio. |
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C) | often quite low, suggesting that international bonds should be a component of an international portfolio. |
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| D) | quite high and the returns to bonds are quite low, so bonds are not recommended for inclusion in an international portfolio. |
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Answer and Explanation
The correlations between international bond markets are quite low and the inclusion of international bonds in an international portfolio will result in higher returns for a given amount of risk.
作者: tycoon 时间: 2008-9-18 10:56
Which of the following statements about an efficient frontier that adds international bonds to a portfolio of international equities is TRUE?
A) | It will dominate a frontier that includes only international equities. |
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| B) | It will be dominated by a frontier that includes only international equities. |
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| C) | It will plot the lower right of a frontier that includes only international equities. |
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| D) | It is indistinguishable from the frontier that includes only international equities. |
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Answer and Explanation
The frontier that includes international bonds will plot to the upper left of the frontier that includes only international equities because it offers a higher return for a given amount of risk, i.e. it dominates the frontier that includes international equities only.
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