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%.

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Definitions:

Weak Current

A low intensity flow of electric charge, typically used in scientific experiments or medical therapies.

Hypothalamus

A region of the brain below the thalamus that coordinates both the autonomic nervous system and the activity of the pituitary, controlling body temperature, thirst, hunger, and other homeostatic systems.

Autonomic Nervous System

The part of the nervous system that regulates involuntary functions, such as heart rate, digestion, and respiration.

Memory

Cognitive function that allows storing, retaining, and recalling information from past experiences.