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When an investor adds international stocks to his or her U.S. stock portfolio, Multiple Choice it will raise his or her risk relative to the risk he or she would face just holding U.S. stocks. he or she can reduce the risk of his or her portfolio. he or she will increase his or her expected return but must also take on more risk. it will have no impact on either the risk or the return of his or her portfolio.

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Option b is correct. When an investor adds international stocks to his or her U.S. stock portfolio, he or she can reduce the risk of his or her portfolio.

A portfolio that concentrates on overseas markets rather than domestic ones is made up of stocks and other assets. An international portfolio can provide diversification and exposure to both emerging and developed markets if it is properly constructed.

An investor who wants exposure to the stocks of economies growing faster than the U.S. may find an international portfolio appealing.

By combining shares of some of the top performers in the industrialized world with emerging-market stocks, the risks of such a strategy can be minimized.

The investor might also take a look at some of the American businesses that are expanding quickly abroad.

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