International Business Finance

John B. Guerard, Anureet Saxena () and Mustafa N. Gültekin
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John B. Guerard: McKinley Capital Management, LLC
Anureet Saxena: McKinley Capital Mgmt, LLC
Mustafa N. Gültekin: University of North Carolina Chapel Hill

Chapter Chapter 21 in Quantitative Corporate Finance, 2022, pp 597-611 from Springer

Abstract: Abstract With the adoption of flexible exchange rates in 1973, international capital markets have become more completely integrated. This chapter discusses portfolio selection of international equities, and how international diversification lowers total risk of portfolios. Particular attention is paid to the diversification implications of Asian stocks, other emerging markets, and Latin American securities. The US equity selection model developed and estimated in Chap. 14 is used to rank global (ex-US) securities, and produces statistically significant information coefficients and excess returns. An investor owns foreign stocks because their inclusion into portfolios produces higher Sharpe ratios than using only domestic securities. Global and (domestic) US securities may produce portfolios of higher returns for a given level of risk.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-87269-4_21

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DOI: 10.1007/978-3-030-87269-4_21

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