Question

explain the primary advantages to investing internationally

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Answer 1

Answer:-

The primary advantages of investing internationally are

1) Diversification of Capital:- A firm or any financial institution will try to expand it's operations internationally as there are lot of benefits which includes the the risk is diversified. For illustration if the investments in one country are adversely effected due to slowdown it can be compensated by an increase in profits in other country. It helps in dividing risk among invested countries. If the investment is confined to only one country and suppose there is crash in the economy the whole business gets effected and may even has to close the operations completely.

2) Tax rebates:- There are number of emerging economies which encourage foreign investments to boost their economies and create employment, moreover there are some economies that are considered as tax havens are the investments are encouraged by these nations.

3) Currency exchange diversification:- There countries investing globally can benefit from currency fluctuations when the investments made in countries with stronger currencies than the domestic countries.

4) Investment through financial instruments:- There are lot of economies where investments can be done in various financial instruments like Mutual funds, Exchange traded funds (ETFs), stock markets and sovereign bonds which gives decent returns.

5) Access to superior technology - When companies tie up with foreign companies they can have access to superior technology which helps the country to manufacture goods and products of good quality which can help in improving the sales and profits.