BENEFITS FROM INTERNATIONAL DIVERSIFICATION: INDIAN EXPERIENCES
Abstract
Investing beyond border reduces risk compared to traditional domestic investment; this assertion is well founded by numerous researches in financial economics. The benefit virtually emerges from two sources. Increasein the number of investible countries that widen scope of international diversification and less than perfect correlation among world markets that essentially helps in risk reduction. Thus “widening scope†and nature of comovement among markets are the two main sources of benefit from international diversification. The study, however suggests that due to various restrictions coupled with “home biasâ€, international investors still rely ondomestic market that suggests diversification inefficiencyReferences
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