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Assume you are a U.S. investor who is considering investments in the French (Stocks A and B) and Swiss (Stocks C and D) stock markets.
Assume you are a U.S. investor who is considering investments in the French (Stocks A and B) and Swiss (Stocks C and D) stock markets. The world market risk premium is 6 percent. The currency risk premium on the Swiss franc is 1.25 percent, and the currency risk premium on the euro is 2 percent. The interest rate on one-year risk-free bonds is 3.75 percent in the United States. In addition, you are provided with the following information: a. Calculate the expected return for each of the stocks. The U.S. dollar is the base currency. b. Explain the differences in the expected returns of the four stocks in terms of w,, and SFr
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