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8 Cards in this Set
- Front
- Back
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Exchange rate risk
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The uncertainty in asset returns due to movements in the exchange rates between the U.S. dollar and foreign currency.
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Interest rate parity relationship, or covered interest arbitrage relationship
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The spot-futures exchange rate relationship that precludes arbitrage opportunities.
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Political risk
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Possibility of expropriation of assets, changes in tax policy, restrictions on the exchange of foreign currency for domestic currency, or other changes in the business climate of a country.
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Currency selection
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Asset allocation in which the investor chooses among investments denominated in different currencies.
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Country selection
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Asset allocation in which the investor chooses among investments in different countries.
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Stock selection
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Choice of specific stocks within a country's equity market.
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Cash/bond selection
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Choice between money market versus longer term bonds.
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European, Australian, Far East (EAFE) Index
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A widely used index of non-U.S. stocks computed by Morgan Stanley.
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