Session 7 | Reading 25 | LOS e    

3 cards

LO e: Evaluate the investment rationale for allocating part of a well-diversified portfolio to emerging markets in countries with above average economic potential.


 
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Created Feb 2, 2011
by
lutfallah

 

 
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1
The stronger economic growth for emerging markets described previously may result in
 
higher stock returns.
2
Furthermore, the increased growth in these markets will
 
increase the demand for capital, which should strengthen their currency values.
3
As a result, the market capitalization of these markets will
 
increase, further justifying their representation in a well-diversified portfolio.

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