32. Assume there is a fixed exchange rate between the Euro and U.S. dollar. The expected return and standard deviation of return on the U.S. stock market are 16% and 13%, respectively. The expected return and standard deviation on the DAX stock market are 11% and 18%, respectively. The covariance of returns between the U.S. and German stock market is 1.5%.

If you invested 50% of your money in the German (DAX) stock market and 50% in the U.S. stock market, the expected return on your portfolio would be

Multiple Choice

• 12.5%.

• 12.0%.

• 13.0%.

• 13.5%.31.

  XYZ's stock price and dividend history are as follows:

  Year	Beginning-of-Year Price				Dividend Paid at Year-End
  2017	$	165			$	4
  2018		195				4
  2019		145				4
  2020		165				4

  31. An investor buys three shares of XYZ at the beginning of 2017, buys another two shares at the beginning of 2018, sells one share at the beginning of 2019, and sells all four remaining shares at the beginning of 2020.

  a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-year rates of return and final answer to 2 decimal places. Do not round other calculations.)

  b. What is the dollar-weighted rate of return? (Hint: Carefully prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2017, to January 1, 2020. If your calculator cannot calculate IRR, you will have to use trial and error or a spreadsheet program.) (Round your answers to 4 decimal places. Negative amount should be indicated by a minus sign.)