From a U. S. investor perspective, diversifying in the international stock markets adds foreign exchange risk and political risk to the portfolio. True or False True False

The correct option is true, as diversifying in the international stocks markets brings foreign exchange risk and political risk.

Explanation:

Foreign exchange risk is the likely loss arising from an investor's vulnerability to foreign currency or foreign-currency denominated investments.

On the other hand, political risk is the likelihood of loss accruing to investor due political decisions or change of government.

From the above, diversifying by investing in other jurisdictions of the world, brings foreign currency exposures due fluctuation in exchange rates between the date of investment and maturity date.

Political unrest in another country where one has invested can also have negative impact.