Consider the following returns in two countries the US and Ireland. Also given is the exchange...
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Consider the following returns in two countries the US and Ireland. Also given is the exchange rate which is the beginning of period dollars ($) for euro (): (ii) (iii) (iv) Period United States (%) Ireland Exchange (%) Rate 1 8 14 $2.00 2 3 10 4 56 -18 6020 24 3.00 -2 2.50 18 3.00 -6 2.50 1.50 What is the average return and standard deviation in each market from the point of view of an Irish investor? What is the correlation coefficient of returns between markets from the point of view of an Irish investor? If the risk-free lending and borrowing rate in Ireland is 5%, is investing in the US market attractive for an Irish investor? Show why, or why not, and explain your answer. If the risk-free lending and borrowing rate in Ireland is 6%, is investing in the US market attractive for an Irish investor? Show why, or why not, and explain your answer. Consider the following returns in two countries the US and Ireland. Also given is the exchange rate which is the beginning of period dollars ($) for euro (): (ii) (iii) (iv) Period United States (%) Ireland Exchange (%) Rate 1 8 14 $2.00 2 3 10 4 56 -18 6020 24 3.00 -2 2.50 18 3.00 -6 2.50 1.50 What is the average return and standard deviation in each market from the point of view of an Irish investor? What is the correlation coefficient of returns between markets from the point of view of an Irish investor? If the risk-free lending and borrowing rate in Ireland is 5%, is investing in the US market attractive for an Irish investor? Show why, or why not, and explain your answer. If the risk-free lending and borrowing rate in Ireland is 6%, is investing in the US market attractive for an Irish investor? Show why, or why not, and explain your answer.
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