Question $4$

Assume that you are a U$.$S$.$ investor who is considering investments in the German $($Stocks A and $B)$ and British $($Stocks C and D$)$ stock markets. The world market risk premium is $4\mathrm{.}5\%.$ The currency risk premium on the euro is $1\%,$ and the currency risk premium on the pound is $-1\%.$ In the United States, the interest rate on one$-$year risk$-$free bonds is $4\%.$ In addition, you are provided with the following information:

$\backslash$table$[[$Stock$,$A$,$B$,$C$,$D$],[$Country$,$Germany,Germany,$\backslash$table$[[$United$],[$Kingdom$]],\backslash$table$[[$United$],[$Kingdom$]]],[{}_w,1\mathrm{.}5,0\mathrm{.}90,1,1\mathrm{.}5],[{}_{lon},1,0\mathrm{.}80,-0\mathrm{.}25,1\mathrm{.}0],[{}_E,-0\mathrm{.}25,0\mathrm{.}75,1\mathrm{.}0,-0\mathrm{.}5]]$

alculate the expected return for each of the stocks. The U$.$S$.$ dollar is the base currency.