The correct answer is: D. can reduce risk due to increased diversification.
International investing is the practice of buying and selling securities in companies or other assets located in other countries. It can be a way to diversify your portfolio and potentially earn higher returns. However, it also comes with additional risks, such as currency fluctuations and political instability.
Option A is incorrect because international investing is not only practical for institutional investors. Individual investors can also invest in international markets through a variety of methods, such as mutual funds, exchange-traded funds (ETFs), and individual stocks.
Option B is incorrect because international investing does not always increase the overall risk of a stock portfolio. In fact, it can actually reduce risk by providing exposure to different economies and currencies.
Option C is incorrect because international investing does not always lead to higher returns than a domestic portfolio. In fact, there is no guarantee that international investments will outperform domestic investments.
Overall, international investing can be a valuable tool for investors who are looking to diversify their portfolios and potentially earn higher returns. However, it is important to understand the risks involved before investing in international markets.