I am wondering why the answer to this should not be C. I feel C is more valid than B.作者: Windjam 时间: 2011-7-13 16:12
Currency risk can be minimized diversifying across markets, not eliminated.作者: susana 时间: 2011-7-13 16:12
But C says that "correlations between equity and currency markets are so low that overall currency risk is minimal" - which is not true for all markets. I feel C is also a problem.作者: pennyless 时间: 2011-7-13 16:12
B is the worst answer.作者: infinitybenzo 时间: 2011-7-13 16:12
So Paraguay - do you feel C could be an answer - not sure if I got you?作者: Roflnadal 时间: 2011-7-13 16:12
Seems pretty straight forward to me. You CANNOT eliminate currency risk via diversification - you must use forwards for that. Thus, the fact that he says you can ELIMINATE currency risk via diversification is blatantly wrong.作者: Windjammer 时间: 2011-7-13 16:12
But is it not blatantly wrong to assume that "correlations between equity and currency markets are so low that overall currency risk is minimal"?作者: Unforseen 时间: 2011-7-13 16:12
manishsd Wrote:
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> But is it not blatantly wrong to assume that
> "correlations between equity and currency markets
> are so low that overall currency risk is minimal"?
Not really, have you traded EU/US/JPY risk convergence in the last 3 years?作者: bodhisattva 时间: 2011-7-13 16:12
