--%>

Question on security returns

Security returns are found to be less correlated across countries than in a country. Why can it be?
Security returns are less correlated possibly because countries are distinct from each other in terms of industry structure, macroeconomic policies, and resource endowments and have non-synchronous business cycles. Securities through a same country are subject to the similar business cycle and macroeconomic policies, therefore causing high correlations among their returns.

   Related Questions in Financial Management

  • Q : Calculate rate of return on investment

    In May 1995, Japan Life Insurance Company invested $10,000,000 in pure-discount U.S. bonds while the exchange rate was 80 yen per dollar. The company liquidated the investment one year afterwards for $10,650,000. The exchange rate turned out 110 yen per dollar

  • Q : Fin 6000 A firm is evaluating two

    A firm is evaluating two mutually exclusive projects that have unequal lives. Evaluate the projects using the equivalent annual annuity approach (EAA), recommend which project they should select. The firm's cost of capital has been determined to be 18 percent, and the projects have the following i

  • Q : What is probability of probabilistic

    What is the probability of probabilistic concepts occurrence in distribution?

  • Q : Example of equilibrium model as Capital

    Explain the example of equilibrium model as Capital Asset Pricing Model.

  • Q : What is the role of derivatives of

    What is the role of the derivatives of Serial Autocorrelation?

  • Q : Most conservative kind of working

    Which is the most conservative kind of working capital financing plan a company can implement? What are the main reasons that firms hold cash?

  • Q : Illustrates the way to optimize hedge

    Illustrates the way to optimize hedge.

  • Q : Discrete/Continuous modelling

    Explain the Discrete/Continuous modelling approach in Quantitative Finance.

  • Q : Euro influence international

    Describe how the advent of the euro would influence international diversification strategies. As the euro-zone will have the similar monetary and exchange-rate policies, the correlations between euro-zone markets a

  • Q : An example of distribution of

    Illustrates an example of distribution of individual numbers or random numbers.