International Diversification and Risk 告 If the investor is allowed to choose among an internationally diversified set of securities,the portfolio set of securities shifts upward and to the left. This is called the internationally diversified portfolio opportunity set
International Diversification and Risk If the investor is allowed to choose among an internationally diversified set of securities, the portfolio set of securities shifts upward and to the left. This is called the internationally diversified portfolio opportunity set
Exhibit 16.4 The Internationally Diversified Portfolio Opportunity Set Expected return of portfolio,Rp Capital market line DP RpP Internationally diversified portfolio opportunity set Rr Domestic portfolio opportunity set Expected risk ODP of portfolio,op The addition of internationally diversified portfolios to the total opportunity set available to the investor shifts the total portfolio opportunity set left,providing lower expected risk portfolios for each level of expected portfolio return
Exhibit 16.4 The Internationally Diversified Portfolio Opportunity Set