QUESTION $2(25$ MARKS$)$

$($a$)$ Discuss the FOUR $(4)$ benefits of diversification. $(12$ marks$)$

$($b$)$ Discuss whether diversification will always lead to greater expected portfolio returns. $(4$ marks$)$

$($c$)$ Investing internationally has often been the advice given to investors looking to increase the diversification and total return of their portfolio. The diversification benefits are achieved through the addition of low correlation assets of international markets that serve to reduce the overall risk of the portfolio. Discuss THREE $(3)$ risks that you consider relevant in making international $($equity$)$ portfolio allocation decisions. $(9$ marks$)$