Investing in Financial Assets

There are two basic categories of investment assets: financial assets and real assets. For the purposes of this chapter, however, we will be discussing what most people think of when the term investment is mentioned: financial assets, such as stocks and bonds denominated and traded in U.S. ­dollars. To be ­properly diversified in financial assets, many financial planners ­recommend some ­exposure to foreign markets or assets denominated and traded in local (non-U.S. dollar) currencies in addition to maintaining holdings in more ­traditional investments. But unless investors invest in an American Depository Receipt ...

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