Assume There Is a Fixed Exchange Rate Between the Swiss

question 39

Multiple Choice

Assume there is a fixed exchange rate between the Swiss Franc and U.S. dollar. The expected return and standard deviation of return on the U.S. stock market are 14% and 11%, respectively. The expected return and standard deviation on the Swiss Stock Exchange (SIX) are 9% and 14%, respectively. The covariance of returns between the U.S. and the SIX is 1.75%.
If you invested 350% of your money in the Swiss (SIX) stock market and 65% in the U.S. stock market, the expected return on your portfolio would be

• A) 12.25%.
• B) 12.5%.
• C) 13.0%.
• D) 13.5%.

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Definitions:

Context-dependent Memory

Information that is better retrieved in the context in which it was encoded and stored, or learned.

Saccadic Eye Movements

Quick, simultaneous movements of both eyes between two or more phases of fixation in the same direction.

Iconic Memory

The sensory register that briefly holds mental representations of visual stimuli.