BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Which of the following is true of portfolio diversification? A diversified portfolio containing positively correlated investments has a lower variance than aportfolio containing a single asset type.

Detailed explanation-2: -International portfolio diversification is an investment strategy which allows an investor to reduce portfolio risk by holding domestic and foreign financial assets simultaneously. Grubel (1968) identifies international portfolio diversification as a source of welfare gains from international economic relations.

Detailed explanation-3: -It aims to minimize losses by investing in different areas that would each react differently to the same event. Most investment professionals agree that, although it does not guarantee against loss, diversification is the most important component of reaching long-range financial goals while minimizing risk.

Detailed explanation-4: -In general, Vanguard recommends that at least 20% of your overall portfolio should be invested in international stocks and bonds. However, to get the full diversification benefits, consider investing about 40% of your stock allocation in international stocks and about 30% of your bond allocation in international bonds.