Advantages associated with investing in foreign securities do not include
A) inefficient foreign security markets producing larger returns
B) global diversification
C) reduction in unsystematic risk
D) tax avoidance on dividend income

Question

Quizplus · Accepted Answer

Tax avoidance on dividend income is not a valid advantage associated with investing in foreign securities since foreign dividend income is still subject to taxes in the investor's home country. The other choices, such as global diversification and reduction in unsystematic risk, are valid advantages of investing in foreign securities. The choice A is also incorrect because a more efficient market would produce smaller returns, not larger returns.

Advantages Associated with Investing in Foreign Securities Do Not Include