You have a fairly large portfolio of U.S. stocks and bonds. You meet a financial
ID: 2621722 • Letter: Y
Question
You have a fairly large portfolio of U.S. stocks and bonds. You meet a financial planner at a social gathering who suggests that you diversify your portfolio by investing in emerging market stocks. Discuss whether the correlation results in Exhibit 3.10 support this suggestion. You have a fairly large portfolio of U.S. stocks and bonds. You meet a financial planner at a social gathering who suggests that you diversify your portfolio by investing in emerging market stocks. Discuss whether the correlation results in Exhibit 3.10 support this suggestion.Explanation / Answer
The exhibit is not given, but if the correlation is highly positive there will not be diversification.
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