2. You currently have all of your wealth invested in U.S. stocks. After learning about diversification, you consider moving part of your portfolio into international markets. You have estimated the following information these are annual returns on a dollar investment): Correlations U.S. Netherlands India Std. dev. Thailand Country Tbills U.S. Netherlands India Thailand Exp. return 5.0% 8.0% 9.0% 12.0% 15.0% 0.458 17.13% 18.05% 26.25% 41.97% 0.032 0.022 0.458 0.032 0.165 0.165 0.189 0.095 0.022 0.189 0.095 The spreadsheet Portfolio.xls can be used to help answer the following questions. a. You decide to invest 20% of your portfolio in either the Netherlands or India. Which is the better investment given the information above? Why? Does the Netherlands or India contribute more to the risk of your portfolio? b. You are not sure that 20% is the right amount to invest in those countries. If you could choose any combination of U.S., Netherlands, and India, what portfolio would you hold? (You can also invest in Tbills, but you only need to find the best portfolio of the three countries.) c. You are extremely risk averse and would like to hold the portfolio with the least risk. If you can invest only in the U.S. and Thailand, what portfolio should you hold (ignore Tbills)? What if you can invest in the U.S., Netherlands, and India? d. You can now invest in any combination of the four countries and Tbills. What international portfolio has the highest risk-return trade-off? What is its expected return, standard deviation, and Sharpe ratio