Indirect diversification benefits


 

Home
Site Map
Add Term
Search
About Us
Contributors

Indirect diversification benefits

Diversification benefits provided by the multinational corporation that are not available to investors through their portfolio investment.



Indirect diversification benefits

Similar Matches

Principle of diversification

Principle of diversification

That portfolios of different sorts of assets differently correlated with one another will have negligible unsystematic risk. In other words, unsystematic risks disappear in diversified portfolios, and only systematic risks persist, those related to particular assets.


Liquidity diversification

Liquidity diversification

Investing in a variety of maturities to reduce the price risk to which holding long bonds exposes the investor.


Currency diversification

Currency diversification

Using more than one currency as an investing or financing strategy. Exposure to a diversified currency portfolio typically entails less exchange rate risk than if all the portfolio exposure were in a single foreign currency.


Diversification

Diversification

Investment jargon for not keeping all your eggs in one basket. Diversification implies that you distribute your capital among various assets to reduce loss if, through bad luck or judgement, one of them fails you.There are four main areas of risk to think about.Asset allocation: spreading your investments among different classes of asset (bonds, equities, property etc)Shares: spreading your stock investments over a sufficient number of shares (or invest in a diversified collective fund)Sectors: making sure the shares you invest in are in companies operating in a variety of sectorsCountries: getting some exposure to economies outside the UK as well as in the UKMost people agree that diversification is essential to reduce risk. There is an argument that to make exceptional returns, you have to concentrate your investments - the big winners theory. 'Put all your eggs in one basket and watch that basket very closely'.


Markowitz diversification

Markowitz diversification

A strategy that seeks to combine in a portfolio assets with returns that are less than perfectly positively correlated, in an effort to lower portfolio risk (variance) without sacrificing return. Related: Naive diversification.


Further Suggestions

Naive diversification
Diversification cone
Unique Diversification Benefit
Cone of diversification
Sector diversification
Diversification
Efficient diversification
International diversification


 
All rights Reserved. Do not copy without permission.