2-2 Short Paper: Globalization of the Financial Markets
September 01, 2022
Ashley Thompson
How do international markets differ from domestic markets?
There are two kinds of marketing which are domestic and international. Domestic
marketing is when marketing of goods and services are restricted to the home country
only. International marketing is the type of marketing which is spread across numerous
countries on the globe. In domestic marketing, there is less government control as
associated to the international marketing because the firm must deal with rules and
regulations of numerous countries. International marketing involves vast capital
investment, but domestic marketing involves less investment for obtaining assets
(Surbhi, 2017). Exchange rates, social differences are also something that potential
investors should look into.
International Securities
International portfolios are a range of stocks and other resources that concentrates on
foreign markets instead of domestic markets. This type of portfolio draws to
shareholders who want to expand their resources by shifting from a domestic-only
portfolio. (Chen, 2022). A foreign portfolio asset can consist of a range of various
resources held in foreign countries, involving bonds, stocks, and cash equals. Foreign
portfolio investing provides shareholders an opening to participate in international
expansion of portfolio assets, which in turn benefits a greater risk-adjusted gain
Risk Levels
International investing starts up a wide range of advantages and it is essential that
shareholders do so sensibly. Looking at a foreign country's economic and political risk
will help potential investors to get a broader picture of if it's worth the investment. The
political risk is linked with foreign governments as well as their politics. Investors should
also look at the foreign country's ability to pay back their debts this is viewed as the
economic risk. (Kuepper, 2022). Potential investors could also use the Shapre Ratio
which is a measurement of the anticipated surplus return of a venture capital in relation
to its volatility. There is also the value at risk that can be applied. This risk measures the
maximum loss that can't be exceeded at the given confidence level. (Nath, 2022). There
are many risks associated with any investment and all precautions should be evaluated
and then a decision can be made.
Asset Allocation Strategies
Asset allocation is an investing strategy that helps an investor's portfolio by helping
determine which investments monies should be shared in. Your ideal asset allocation is
the mix of investments, from most aggressive to safest, that will earn the total return
over time that you need. (Heyford, 2022). The amount that is devoted to each potential
investments is decided based on the amount of time you want to keep invested and as
well as the investor's risk acceptance. The end goal is to be able to have minimal risks
but also getting back the return that you are wanting.
References:
Chen, James. (2022, June 30). International Portfolio. Retrieved from
https://www.investopedia.com/terms/i/international-portfolio.asp
Heyford, Shauna. (2022, February 19). How to Achieve Optimal Asset Allocation.
Retrieved from https://www.investopedia.com/managing-wealth/achieve-optimal-asset-
allocation/
Kuepper, Justin. (2022, May 04). Global Investment Risk. Retrieved fro