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International Portfolio Investment

In: GLOBAL CORPORATE FINANCE A Focused Approach

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  • Suk H. Kim

Abstract

In 1990, two American finance professors — Harry Markowitz and William Sharpe — received the Nobel Prize in economic science because of their contribution to portfolio theory. A highly respectable mean-variance model developed by Markowitz (1959) and Sharpe (1964) employs two basic measures: an index of expected return (mean) and an index of risk (variance or standard deviation). The expected value for a portfolio of securities is simply the sum of the individual returns for the securities that make up the portfolio. The standard deviation as a measure of risk for the portfolio is not easily measured. In many business situations, risks of individual securities tend to offset each other. Thus, with successful diversification, the investor may select a portfolio having less risk than the sum of the risks of individual securities…

Suggested Citation

  • Suk H. Kim, 2023. "International Portfolio Investment," World Scientific Book Chapters, in: GLOBAL CORPORATE FINANCE A Focused Approach, chapter 12, pages 291-310, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811281969_0012
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    More about this item

    Keywords

    Global Finance; International Finance; International Financial Management; International Accounting; International Business; International Business Finance; Foreign Trade; International Economics; Foreign Exchange; International Corporate Finance; Multinational Finance; International Taxation;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • F3 - International Economics - - International Finance
    • F30 - International Economics - - International Finance - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F - International Economics

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