Question

Why in the long run, the profits of holding a domestic financial assets is equivalent to the profits of holding a foreign assets?

Answer 1

Ans:

In long run , the investment portfolio face so many fluctuation in interest rate . the stocks in which the investors invest their money fluctuate accordingly.

The domestic financial asset and foreign financial assets same way response to market as per their market value.

In long run the expected return from asset or stocks invested in exchange platform tends to vary in rate overa period of time which doesnot impact the return on asset heavily.

At one time when asset value decreases , at another point of time asset value increases. this situation happens to both domestic and foreign financial asset.

The return from these assets is marginal as in long run the investment is bulky.

These fiancial asset are bank deposit , mutual fund investment term depoits etc.. it dosenot affect the psycological aspect of investor whetherit is domestic assets or foreign assets, the profit is equivalent but not equal.