Over the period 2017-2021, most correlations between the U.S. stock index and stock-index portfolios of other countries were:

Multiple Choice

0.9 or above.

approximately zero.

positive but less than 0.9.

negative.

None of the options are correct.

Question 2

Suppose the 1-year risk-free rate of return in the U.S. is 5%. The current exchange rate is 1 pound = U.S. $1.60. The 1-year forward rate is 1 pound = $1.57. What is the minimum yield on a 1-year risk-free security in Britain that would induce a U.S. investor to invest in the British security?

Multiple Choice

None of the options are correct.

2.50%

3.03%

2.44%

7.62%