Chartered Investment Manager (CIM) Practice Exam · Question
Why might a Canadian investor consider international diversification in their portfolio?
International diversification can reduce portfolio risk by combining assets with differing correlations across various global economies and potentially enhance
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Question: Why might a Canadian investor consider international diversification in their portfolio?
Answer options:
- To concentrate all investments in a single, high-growth market.
- To eliminate all investment risk entirely. ✅ To reduce overall portfolio risk and enhance potential returns through exposure to different economies.
- To avoid paying taxes in Canada.
Correct answer: To reduce overall portfolio risk and enhance potential returns through exposure to different economies.
Explanation: International diversification can reduce portfolio risk by combining assets with differing correlations across various global economies and potentially enhance returns by accessing growth opportunities outside the domestic market.
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