Consider the following annualized stock return data:

Average FTSE 100 index return (GBP):	6%
Average Frontier market index return (USD):	8%
Average GBP/USD spot return	3%
Volatility of the FTSE 100 index return (GBP):	13%
Volatility of GBP/USD spot return	9%
Correlation of FTSE 100 and Frontier market return(GBP):	0.32
Covariance of FTSE 100 and Frontier market return(GBP):	0.75%

For the questions below, assume the U.K risk-free rate = 2% and the correlation between average Frontier market index return (USD) and GBP/USD spot return is zero:

1. Given the information provided in the table above, answer the following questions:
   1. What is the volatility of the Frontier market index return in GBP? [2 marks] ii. What is the volatility of the Frontier market index return in USD? [3 marks] iii. Calculate the Sharpe ratio for both the FTSE 100 and Frontier market index

(GBP). [4 marks]

2. Given the information provided in the table above, answer the following questions:
   1. What would be the return of an equally weighted portfolio consisting of the

FTSE 100 index and the Frontier market index? Interpret your results. [2 marks] ii. What would be the volatility an equally weighted portfolio consisting of the

FTSE 100 index and the Frontier market index? Interpret your results. [3 marks] iii. What would be the Sharpe ratio an equally weighted portfolio consisting of the

FTSE 100 index and the Frontier market index? Interpret your results. [3 marks]

3. Would you invest in a single-country exchange traded fund (ETF) to achieve international diversification? Discuss.