Are you able to assist? Kind Regards I dont know how to rephrase the question. t

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Are you able to assist?

Kind Regards

I dont know how to rephrase the question. the entire question is attached with all of the information. what additinoal info do you need?

Chapter 25, Problem 4CP Show all steps Problem Chapter 224 Chapter 23 Chapter 24 Chapter 24.1 Chapter 24.6 Chapter 25 John Irish, CFA, is an independent investment adviser who is assisting Alfred Darwin, the head of the Investment Committee of General Technology Corporation, to establish a new pension fund. Darwin asks Irish about international equities and whether the Investment Committee should consider them as an additional asset for the pension fund. a. Explain the rationale for including international equities in General's equity portfolio. Identify and describe three relevant considerations in formulating your answer. Y A 1CP b. List three possible arguments against international equity investment and briefly discuss the significance of each. 1EE 1PS c. To illustrate several aspects of the performance of intemational securities over time, Irish shows Darwin the accompanying graph of investment results experienced by a U.S. pension fund in the recent past. Compare the performance of the U.S. dollar and non-U.S. dollar equity and fixed-income asset categories, and explain the significance of the result or the account performance index relative to the results of the four individual asset class indexes Real Returns (%) 2EE BEE 3PS 4CP .Account Performance Index EAFE Index 4EE . Non-U.S. $ Bonds U.S.S Bonds S&P; Index Variabil standar 10 20 Annualized Historical Performance Data 30 40 deviation)

Explanation / Answer

a.) The primary rationale is diversification opportunity. The investor tries to diversify the opportunity. There are some factors that result in in low correlation of returns from stock the national boundaries.

1) Business cycles having imperfect correlation

2) Inflation rates having imperfect correlation

3) Volatility in exchange rates

b) There are some obstacles in international investing, which are as follows

1) Information availability: The available information has insufficient data of which decisions are to be taken. It is difficult to understand the and analyse the US data that can be understood easility. One more disadvantage is the is the time gap for reporting.

2) Liquidity: Liquidity is one of the factors that affects that affects at the time of buying and selling, size and time of the product without affecting the market price. Forex exchanges have certain limitations that include higher volatility

c) The performance for the data asset class shows the bonds that the us dollar recieves an incremental return as compared to US bonds and the bonds with higher riks. From the perspective of risk and return, fixed income assets have outperformed S&P index of US equity.

The graph of the account performance index revela sthat the the total outcome is superior to sum total of its component parts. These returns are due to the advantages and differential covarinace and diversification in Multimarket.

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