Assume There Is a Fixed Exchange Rate Between the Canadian

question 14

Multiple Choice

Assume there is a fixed exchange rate between the Canadian and U.S.dollar.The expected return and standard deviation of return on the U.S.stock market are 18% and 15%,respectively.The expected return and standard deviation on the Canadian stock market are 13% and 20%,respectively.The covariance of returns between the U.S.and Canadian stock markets is 1.5%.If you invested 50% of your money in the Canadian stock market and 50% in the U.S.stock market,the expected return on your portfolio would be _________.

• A) 12.0%
• B) 12.5%
• C) 13.0%
• D) 15.5%
• E) none of these

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Definitions:

Paradox Of Voting

A situation in democratic decision-making where rational individual choice can lead to an outcome that seems irrational or suboptimal for the group.

Principal-Agent Problem

A dilemma in economics where one party (the agent) is expected to act in the best interest of another party (the principal) but may have a conflict of interest.

Paired-Choice Votes

Paired-choice votes involve voters making choices between pairs of candidates or options rather than voting for a single option amongst many.

Marginal Benefit

The incremental gain in happiness or utility a consumer achieves from purchasing an additional unit of a good or service.