International Business Finance

  • John B. GuerardJr.
  • Anureet Saxena
  • Mustafa Gultekin


With the adoption of flexible exchange rates in 1973, international capital markets have become more completely integrated. This chapter discusses portfolio selection of international equities and how international diversification lowers total risk of portfolios. Particular attention is paid to the diversification implications of Asian stocks, other emerging markets, and Latin American securities. The US equity selection model developed and estimated in chapter “Risk and Return of Equity and the Capital Asset Pricing Model” is used to rank global (ex-US) securities and produces statistically significant information coefficients and excess returns. An investor owns foreign stocks because their inclusion into portfolios produces higher Sharpe ratios than using only domestic securities. Global and (domestic) US securities may produce portfolios of higher returns for a given level of risk.


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Copyright information

© Springer Nature Switzerland AG 2021

Authors and Affiliations

  • John B. GuerardJr.
    • 1
  • Anureet Saxena
    • 2
  • Mustafa Gultekin
    • 3
  1. 1.McKinley Capital Management, LLCAnchorageUSA
  2. 2.McKinley Capital Management, LLCStamfordUSA
  3. 3.Kenan-Flagler Business SchoolUniversity of North Carolina Chapel HillChapel HillUSA

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