Japanese Securities: A Guide for American Investors

Japanese Securities

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Question

For an American investor, Japanese securities tend to have

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Explanations

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A. B. C. D. E.

Explanation

Japanese firms use considerably more financial leverage than American firms, and therefore tend to have higher financial risk. American capital markets are acknowledged to be the most liquid in the world, followed closely by those in Japan and London. Japanese securities therefore tend have higher liquidity risk than

American securities. For an American investor, American securities have no exchange rate risk because they are denominated in dollars, while Japanese securities are denominated in a yen.

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