Nuvama hedge fund is looking to create a stable$/$ less risky international portfolio. Analysts at Nuvama collect the following data on India. Indian stock returns have a volatility of $25\%$ and INR$/$$ returns have a volatility of $6\%.$ Indian currency returns and Indian stock returns $($in INR terms$)$ have a very high correlation of $0\mathrm{.}80.$ The correlation between Indian equity return $($measured in dollar terms$)$ and the US stock market return is $0\mathrm{.}20.$ Which of the following is true?

Group of answer choices

Dollar returns for Indian equity markets will be substantially more volatile than the volatility of Indian equity markets for the Indian investors as INR$/$$ exchange rate has very high volatility.

Dollar returns for Indian equity markets will be substantially more volatile than the volatility of Indian equity markets for the Indian investors as INR$/$$ exchange rate has very high volatility and the currency and equity returns for India are highly correlated.

Even if Indian equity market returns in dollar terms are very risky for a US investor, a portfolio of Indian and the US equities can exhibit low volatility and better Sharpe ratios.

Both A and C

Both B and C