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Business, 10.04.2020 01:21 logan797

Assume you are a U. S. investor who is considering investments in French (stocks A and B) and Swiss (Stocks C and D) stock markets. The world market risk premium is 6%. The currency risk premium on the Swiss franc is 1.25 percent, and the currency risk premium on the euro is 2%. The interest rate on one-year risk-free bonds is 3.75% in the U. S. In addition, you are provided with the following information

Stock Country β γ γE
A Germany 1.5 0.75 -0.25
B Germany 0.90 0.80 0.75
C UK 1 -0.25 1
D U. K. 1.5 1.0 -0.5

Calculate the expected return for Stock C. The U. S. dollar is the base currency.

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