1342_IM_Word_docsM17_EITE1342_12E_IM_C17课件.docVIP

Chapter 17International Portfolio Theory and Diversification (Questions 17-1. Diversification Benefits. How does the diversification of a portfolio change its expected returns and expected risks? Is this in principle any different for internationally diversified portfolios? The diversification of a portfolio results primarily in the reduction of risk. For a domestic portfolio, the diversification of the portfolio results in a weighted average expected return, but a reduction in risk as the returns of individual securities will be less than perfectly correlated. This principle also applie