Question: Suppose that Alexander Co., a U.S. based MNC, is trying to decide the location of a new project in which they plan to invest. Alexander
Suppose that Alexander Co., a U.S. based MNC, is trying to decide the location of a new project in which they plan to invest. Alexander can invest in the new project in either the United States or Germany. Upon completion, the project will comprise 50.00% of Alexander's total invested funds, with the remaining 50.00% being invested in the United states. Forecasted intormation regarding the proposed project over a 5 -year period, including the 50.00% of funds invested in the existing business, are shown in the following table: In the previous stage of this problem you fcund that the expected returns for either portfolio - the potential portfolio with the Germany-based project and the potential portfolio with the U.S.-based project - were identical. Thus. Alexander wishes to analyze the risk involved with investing in each of the projects, as measured by the variance of their overall portfolio under each scenario. If Alexander invests in the U.5.-based project, the overal variance of their portfolio would be If Alexander invests in the Germanybased project, the overall vartance of their portfolio would be
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