International Diversification and foreign exchange Risk The foreign exchange risks of a portfolio,whether it be a securities portfolio or the general portfolio of activities of the MNE,are reduced through international diversification. Purchasing assets in foreign markets,in foreign currencies may alter the correlations associated with securities in different countries (and currencies). 分 This provides portfolio composition and diversification possibilities that domestic investment and portfolio construction may not provide. The risk associated with international diversification,when it includes currency risk,is very complicated when compared to domestic investments.International Diversification and foreign exchange Risk The foreign exchange risks of a portfolio, whether it be a securities portfolio or the general portfolio of activities of the MNE, are reduced through international diversification. Purchasing assets in foreign markets, in foreign currencies may alter the correlations associated with securities in different countries (and currencies). This provides portfolio composition and diversification possibilities that domestic investment and portfolio construction may not provide. The risk associated with international diversification, when it includes currency risk, is very complicated when compared to domestic investments