2. You are provided a correlation coefficient matrix for the 7 major world stock exchanges (monthly...
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2. You are provided a correlation coefficient matrix for the 7 major world stock exchanges (monthly observations, 1991-2021) as follows: Brazil Canada Germany Japan France U.K. U.S. 1 0.24 1 Germany 0.12 0.34 Japan 0.13 0.42 France U.K. U.S. Brazil Canada C. 1 0.88 0.52 1 0.62 0.61 0.49 0.62 1 -0.12 0.81 0.72 0.34 0.59 0.67 0.06 0.53 0.17 Explain why (continue) 1 0.42 Explain why? 1 a. If you are an aggressive investor as a risk lover, which market will you invest in most likely? Explain why? b. According to the above data, the U.S. stock market dominates one other market. So you would avoid that market most likely. Which stock market is it? Which pair of markets tends to move in the same direction most probably? Explain why? E(R), % 1.6 1.2 0.3 1.1 0.8 0.7 0.5 [end] d. From the US investors perspective, which foreign market do you think provides the best opportunity for the maximum gain from international portfolio diversification? Var (R) 16.3 9.6 10.4 12.5 9.1 9.5 8.6 2. You are provided a correlation coefficient matrix for the 7 major world stock exchanges (monthly observations, 1991-2021) as follows: Brazil Canada Germany Japan France U.K. U.S. 1 0.24 1 Germany 0.12 0.34 Japan 0.13 0.42 France U.K. U.S. Brazil Canada C. 1 0.88 0.52 1 0.62 0.61 0.49 0.62 1 -0.12 0.81 0.72 0.34 0.59 0.67 0.06 0.53 0.17 Explain why (continue) 1 0.42 Explain why? 1 a. If you are an aggressive investor as a risk lover, which market will you invest in most likely? Explain why? b. According to the above data, the U.S. stock market dominates one other market. So you would avoid that market most likely. Which stock market is it? Which pair of markets tends to move in the same direction most probably? Explain why? E(R), % 1.6 1.2 0.3 1.1 0.8 0.7 0.5 [end] d. From the US investors perspective, which foreign market do you think provides the best opportunity for the maximum gain from international portfolio diversification? Var (R) 16.3 9.6 10.4 12.5 9.1 9.5 8.6
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Related Book For
International Financial Management
ISBN: 9780077861605
7th Edition
Authors: Cheol Eun, Bruce Resnick
Posted Date:
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