1. To achieve international diversification, John invests in the USA and India indexes. What are the weights on the two indexes to achieve the optimal international portfolio? What are the mean and standard deviation of returns on his optimal international portfolio? [Show calculations for excel]
2. Mary instead invests in the USA and Korean indexes. What are the weights on the two indexes to achieve the optimal international portfolio? What are the mean and standard deviation of returns on her optimal international portfolio [show calculations for excel]

Font Paragraph Styles Editing Part One: International Portfolio Management 1. Go to http://finance.yahoo.com, download monthly Adj. close prices (adjusted for Example of data presentation: dividend and stock split) from 12/01/2010 through 12/01/2017 for the following three ^GSPC BSESN ^KS11 GSPC BSESN ^KS11 country indexes. Adj. Adj. Adj. Closing Closing Closing Country Ticker Dat Price Price Price HPR HPR HPR USA S&P 500 `GSPC 12/2/2013 6.6 India `BSESN ^KS11 11/1/2013 2.45 79.2 7.75 Korea 10/1/2013 2.48 75.4 4.72 Note: Historical T-bill rates are provided in a separate EXCEL file. 9/2/2013 2.14 78.5 4.18 8/1/2013 2.87 74.6 10.19 Compute monthly holding period return using Adj. close prices. 7/1/2013 5.95 74.8 11.18 Use the EXCEL statistical functions to compute mean (using AVERAGE) and standard 6/3/2013 11.44 78.4 16.80 deviation (using STDEV) of the monthly return for each index. 5/2/2013 79.1 20 95 Assume that historical mean returns are good estimates of expected returns. Mean STD To achieve international diversification, John invests in the USA and India indexes. What are the weights on the two indexes to achieve the optimal international portfolio? What are the mean and standard deviation of returns on his optimal international portfolio? [All calculations should be done in EXCEL with clear labels.] Mary instead invests in the USA and Korean indexes. What are the weights on the two indexes to achieve the optimal international portfolio? What are the mean and standard deviation of returns on her optimal international portfolio? [All calculations should be done in EXCEL with clear labels. ] Discuss whose optimal portfolio performs better (John or Mary), and explain why. Also discuss potential reason(s) that causes the difference. (At least a half or one page discussion, double space) Use the following statistical functions in excel: 1. Function AVERAGE for mean Function STDEV for standard deviation Function COVAR for covariance Function CORREL for correlation coefficient LO