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Task 2-3 (8 points) Tom is a Sweden based investor. He just sold shares of Coca-Cola that he had bought six months ago. He bought
Task 2-3 (8 points) Tom is a Sweden based investor. He just sold shares of Coca-Cola that he had bought six months ago. He bought those shares for $ 49.04 per share; the exchange rate was SEK 8.35 per dollar. He sold the stock for $ 53.53 per share and converted the USD proceeds into SEK at an exchange rate of SEK 8.45 per dollar. a) What is the rate of return in USD terms? The rate of return in USD terms is - (round to 4 decimals; do not use "%" and percentage) b) Compute the rate of return on the investment in SEK terms. The rate of return in SEK terms is (round to 4 decimals; do not use "%" and percentage) Suppose that Tom invested 60% of his proceeds in German market and 40% in UK market. And we found the following data in SEK terms. Stock market Return (mean) Risk (SD) Germany 0.74% 6.44% United Kingdom 0.82% 7.05% The correlation coefficient between the two markets is 0.60. Determine the expected return and standard deviation of the resulting international portfolio. c) The expected return of the portfolio is (round to 4 decimals; do not use "%" and percentage) (round to 4 decimals; do not use "%" and d) The standard deviation of the portfolio is percentage) Maximum marks: 8
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