Question

Which of the following is NOT a reason for home bias in international portfolio management?

Group of answer choices

Diversification away from systematic risk

Market frictions

Unequal access to information

Hedging domestic liabilities

Answer 1

Diversification away from systematic risk is a reason for investment into the international market. it cannot be a reason for home bias for investment into international market, as this factor supports investment into international market not contradict it.

Other factors like market frictions and equal access to the information and hedging of the domestic liabilities are very common example for home bias while investment into a foreign market.

So the correct answer would be option( A).