Problem
In the previous chapters, where we considered domestic and foreign assets as perfect substitutes, the uncovered interest rate parity captured this hypothesis in the models developed. However, as has been argued throughout this chapter, international assets are not necessarily perfect substitutes. Present economic reasons that justify the diversification of investor portfolios. What factors, besides the rate of return, can influence the behavior of asset demand?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.