AJAFIN 6605 -10International Portfolio Diversification.
A portfolio is a collection of securities held byindividual or institutional investors.
Diversification is the allocation of investable funds toa variety of instruments
.The rationale for diversification is that investorscan greatly reduce risk without adversely affecting return.
Certain simplifying assumptions are made about marketoperations and the psychology of investors.
A Perfect Market
: is a market free of any impedimentsto trading such as transaction costs, costly information,regulatory constraints, etc.