This timely volume addresses three important recent trends in the
internationalization of United States equity markets: extensive market
integration through foreign investment and links among stock prices
around the world; increasing securitization as countries such as Japan
come to rely more than ever before on markets in equities and bonds at
the expense of banks; and the opening of national financial systems of
newly industrializing countries to international financial flows and
institutions, as governments remove capital controls and other barriers.
Eight essays examine such issues as the current extent of international
market integration, gains to U.S. investors through international
diversification, home-country bias in investing, the role of time and
location around the world in stock trading, and the behavior of country
funds. Other, long-standing questions about equity markets are also
addressed, including market efficiency and the accuracy of models of
expected returns, with a particular focus on variances, covariances, and
the price of risk according to the Capital Asset Pricing Model.