A Swedish investor based in Sweden, who expects the U.S. dollar to depreciate by 5% over the next year. The interest rate on one-year risk-free bonds is 3.5% in the United States, and 2.75% in Sweden. The current exchange rate is SEK 6.35 per U.S. dollar. You buy some U.S. stocks with an expected return of 8% in dollars: (a) Calculate the foreign currency risk premium from the Swedish investor's viewpoint. (1 mark) (b) Calculate the expected return on the U.S. stock from the Swedish investor's viewpoint, that is, in Swedish krona. (1 mark) (c) Calculate the risk premium on the U.S. stock from a U.S. viewpoint and from the Swedish investor's viewpoint. (2 marks) (d) Calculate the expected return on the U.S. stock from the Swedish investor's viewpoint, assuming that the Swedish investor hedges the currency risk. Calculate the risk premium on the hedged U.S. stock from the Swedish investor's viewpoint. (2 marks) A Swedish investor based in Sweden, who expects the U.S. dollar to depreciate by 5% over the next year. The interest rate on one-year risk-free bonds is 3.5% in the United States, and 2.75% in Sweden. The current exchange rate is SEK 6.35 per U.S. dollar. You buy some U.S. stocks with an expected return of 8% in dollars: (a) Calculate the foreign currency risk premium from the Swedish investor's viewpoint. (1 mark) (b) Calculate the expected return on the U.S. stock from the Swedish investor's viewpoint, that is, in Swedish krona. (1 mark) (c) Calculate the risk premium on the U.S. stock from a U.S. viewpoint and from the Swedish investor's viewpoint. (2 marks) (d) Calculate the expected return on the U.S. stock from the Swedish investor's viewpoint, assuming that the Swedish investor hedges the currency risk. Calculate the risk premium on the hedged U.S. stock from the Swedish investor's viewpoint. (2 marks)