16657 Lecture Notes - Lecture 8: Call Option, Investopedia, Net Profit
Document Summary
Describe the two main benefits of investing internationally. Opportunity allo(cid:449)s australia(cid:374) i(cid:374)(cid:448)estors to access (cid:373)arkets (cid:449)e do(cid:374)"t ha(cid:448)e i(cid:374) australia. Diversification, investors can reduce risk by investing into international markets as it reduces exposure to domestic market risk. Share prices in exchanges in emerging markets are generally more volatile than those in more developed markets. This is due to the comparatively small capitalisation of the markets and strong investor sensitivity to external factors (political and economic shocks). When currency volatility is also taken into account investments in emerging market equities can be doubly volatile. Futures contracts can be divided into two basic categories: commodity futures originally these were based exclusively on bulk commodities, iron ore, coking coal, gold, wheat, financial futures these were first traded 1972. The abandonment of fixed exchange rates in major industrialised countries since that time; plus more recently the deregulation of interest rates has increased the desirability of futures due to their risk hedging possibilities.
