C/F/93. International Portfolio Diversification and Eurobonds definition

The paper is a brief explanation of two important area of modern finance theory – Eurobonds and Portfolio theory. The first part is about Portfolio diversification. Here you can find the most fundamental information about equity and bond markets and main indicators that are used to assess the movement of them. It includes a simple example of a foreign market beta with explanation of benefits it creates. We also discuss whether the emerging market outperforms developed market as a tool of international diversification and compare international diversification with direct investments. The paragraph contains some information about ADRs. It also contains two numerical examples picturing our ability to implement all the knowledge presented above. The second paragraph is mostly about bonds, particular about Eurobonds, Eurocurrency and Foreign bonds. We describe the main features and tools of the bonds and also explain how it works in practice. Two simple but important examples are available here. This paper is an ideal tool for exam preparation.