Question
The following table contains rate of returns in the US in US dollars and in Australia in Australian dollars. Also the USD/AUD exchange rate at
The following table contains rate of returns in the US in US dollars and in Australia in Australian dollars. Also the USD/AUD exchange rate at the beginning of each year is given.Calculate the following:
a) Average rates of returns and standard deviations to investors in each respective markets
b) Average return and standard deviation to a US investor investing in Australia.
c) Average return and standard deviation to an Australian investor investing in the US.
d) Correlations between the two markets from US investor's point of view
e) Correlations between the two markets from an Australian investor's point of view
f) Rate of return and standard deviation to a US investor that invests 60% in the US and 40% in Australia.
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