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Assume that the domestic volatility (standard deviation in yen) of the Japanese stock market is 18%. The volatility of the yen against the U.S. dollar
Assume that the domestic volatility (standard deviation in yen) of the Japanese stock market is 18%. The volatility of the yen against the U.S. dollar is 6%. What would the dollar volatility of the Japanese stock market be for a U.S. investor if the correlation between the Japanese stock market returns and exchange rate movements were zero? Show your work. (4 points) QUESTION 23 Refer to the previous question. Suppose the dollar volatility of the Japanese stock market is 18.3%, what is the correlation between the Japanese stock market movements and exchange rate movements? Express your answer as a decimal. Round your answers to the nearesr 1000000th decimal points ( 6 decimal points. ( 3 points)
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