Assume There Is a Fixed Exchange Rate Between the Canadian

question 4

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 standard deviation of return of your portfolio would be _________.

• A) 12.53%
• B) 15.21%
• C) 17.50%
• D) 18.75%
• E) none of these

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