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What are traditional barriers to international investment?

Answer:

Most theoretical developments in international finance and macroeconomics are based on the notion that world capital markets are perfectly integrated. The pricing models also assume that expected returns and asset prices are determined in an internationally integrated financial environment in which an identical asset is traded at the same risk-adjusted price in all markets. Price discrepancies between two markets are arbitraged because there are no intracountry or intercountry restrictions on capital flows.

First answer by Megan Samples. Last edit by Megan Samples. Contributor trust: 0 [recommend contributor ]. Question popularity: 2 [recommend question].

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