Marc Anthony Inc. is a US firm that plans to invest in a new project in either the United States or in
France. Once the project is completed, it will make up 30% of the total funds invested in both the existing
operations of Marc Anthony and of the new project. Therefore, 70% will be invested in its US core
business. Following is some key data of Marc Anthony's current operations and proposed project:
		Characteristics of Proposed Project
	Existing Business	If Located in USA	If Located in France
Mean Expected Annual Return on Investment (after taxes)	20%	25%	25%
Standard Deviation of expected annual after tax returns on investment	10%	9%	11%
Correlation of expected annual after tax returns on investment with after tax returns of existing US business		0.80	0.02
Since the returns of the project are the same for both USA and France locations, management of
Marc Anthony, Inc. wish to minimize risk with respect to the overall operations of the company.
Calculate the portfolio variance for Marc Anthony with operations in USA and project is USA and then
calcualte the portfolio variance for Marc Anthony with operations in USA and project in France.
Which project lowers the risk of the company overall?