Domestic factors were important than international factor, Financial Management

Why do you think the empirical studies as regards factors influencing equity returns mainly showed that domestic factors were more significant than international factors, and, secondly, that industrial membership of a firm was of little significance in forecasting the international correlation structure of a set of international stocks?

Answer:  When national security markets have become very much integrated in recent years, there is still a remarkable amount of segmentation that brings about the advantage to be derived from international diversification of financial assets.  Monetary and fiscal policies be different among countries due to different economic circumstances.  The economic policies of a country directly influence the securities traded in the country, and they will behave in a different way than securities traded in another country along with other economic policies being implemented. Therefore, it is not surprising that domestic issues are found to be more important than international factors in influencing security returns. Likewise, industrial activity within a country is as well affected by the economic policies of the country; so firms in similar industry group, but from different countries, will not necessarily behave similar in all countries, nor should we suppose the securities issued by these firms to behave alike.

Posted Date: 5/9/2013 4:14:24 AM | Location : United States







Related Discussions:- Domestic factors were important than international factor, Assignment Help, Ask Question on Domestic factors were important than international factor, Get Answer, Expert's Help, Domestic factors were important than international factor Discussions

Write discussion on Domestic factors were important than international factor
Your posts are moderated
Related Questions
Shareholders' wealth maximization Shareholders' wealth maximization refers to maximization of the net present value of every decision made in the firm. Total present value is e

Cash Flow Statement Ratios: This ratio, which is defined as a percentage, compares a company's operating cash flow to its total sales or revenues, which provide investors an i

Calculation of weighted average cost of capital (WACC) Market values Market value of equity = 5m × 4.50 = $22.5 million Market value of preference shares = 2.5m × .0762 =

What is Commercial Paper? Please provide me report on Estimation of Commercial Paper. It is about 2000 words count report on topic Commercial Paper.

Expalin the basic concept of financial management and Cost of Retained Earnings and External Equity??? Also explain the hoe can ew calculate the external equity? Help me

Investors are always interested in estimating the price sensitivity of a bond to change in market interest rates. Let us study how prices change both in terms of

Monitoring and Controlling Budgets: The preparation of budgets is only part of the budget cycle.  Once set, an organisation should actively monitor actual revenue and expenditu

Q. Example on Walters dividend model? Example: - The following information is obtainable in respect of a firm: Capitalisation Rate (Ke)                     = 10% Earning

Extendible reset bonds are floaters in which the issuer is required to reset the coupon rate so that the issue will trade at a predetermined price (usually above

Hi'' can you tel me a how you describe what is a company las or an example. Thanks iulia