6 Questions
Which of the following is a risk faced by an investor when investing in a foreign currency denominated bond?
Exchange rate risk
If an Indian investor purchases a dollar-denominated bond and the rupee appreciates against the US dollar, what will be the impact on the investor's returns?
The investor will receive fewer rupees than expected.
What is the term used to describe the uncertainty of returns caused by the possibility of a major change in the political or economic environment in a country?
Political risk
What is the term used to describe the risk associated with wars, terrorist acts, and tensions between states that affect the normal and peaceful course of international relations?
Geopolitical risk
When investing in countries with unstable political-economic systems, what should an investor include in their required rate of return?
A country risk-premium
What is the primary benefit of a globally diversified portfolio for investors?
Reduced overall risk through diversification
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