| Cash/bond selection | Asset allocation in which the choice is between short-term cash equivalents and longer-term bonds.
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| Country selection | A type of active international management that measures the contribution to performance attributable to investing in the better-performing stock markets of the world.
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| Covered interest arbitrage relationship | See interest rate parity theorem.
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| Currency selection | Asset allocation in which the investor chooses among investments denominated in different currencies.
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| European, Australian, Far East (EAFE) index | A widely used index of non-U.S. stocks computed by Morgan Stanley.
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| Exchange rate risk | The uncertainty in asset returns due to movements in the exchange rates between the dollar and foreign currencies.
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| Interest rate parity theorem | The spot-futures exchange rate relationship that prevails in well-functioning markets.
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| Political risk | Possibility of the expropriation of assets, changes in tax policy, restrictions on the exchange of foreign currency for domestic currency, or other changes in the business climate of a country.
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| Stock selection | An active portfolio management technique that focuses on advantageous selection of particular stocks rather than on broad asset allocation choices.
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