Suppose the expected return for investment in the Argentine stock market is 12% and the expected return for investment in the U.K. stock market is 10%. Also suppose that the correlation between U.K. and Argentine equity returns is 0.25, the volatility of equity return in U.K. is 0.35 and the volatility of equity return in Argentina is 0.156. Assume that the risk free rate is 4%. Then what is the Hurdle rate for the Argentine equity investment for an U.K. investor?

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To calculate the hurdle rate for the Argentine equity investment for a UK investor we can use t... View the full answer