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Assume you are a U.S. investor who is considering investments in the German (stock A) and Italian (stock B) markets. The world market risk premium
Assume you are a U.S. investor who is considering investments in the German (stock A) and Italian (stock B) markets. The world market risk premium is 6 percent. The currency risk premium on the Italian lira is 1.75 percent, and the currency risk premium on the euro is 1.5 percent. The interest rate on one-year risk-free bonds is 4.25 percent in the United States. In addition you are provided with the following information: Stock A B 1 1.5 Y 1 -1 YIT -0.3 0.75 Assume you are a U.S. investor who is considering investments in the German (stock A) and Italian (stock B) markets. The world market risk premium is 6 percent. The currency risk premium on the Italian lira is 1.75 percent, and the currency risk premium on the euro is 1.5 percent. The interest rate on one-year risk-free bonds is 4.25 percent in the United States. In addition you are provided with the following information: Stock A B 1 1.5 Y 1 -1 YIT -0.3 0.75
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