Answered step by step
Verified Expert Solution
Question
1 Approved Answer
URGENT! WILL GIVE THUMBS UP IF YOU ANSWER ALL QUESTIONS PROPERLY. The data given to you in the following table contains the average monthly returns
URGENT! WILL GIVE THUMBS UP IF YOU ANSWER ALL QUESTIONS PROPERLY.
The data given to you in the following table contains the average monthly returns and standard deviations for the S&P 500 index (in USD) and. EAFE index (in Local currency and USD) for the period 1991 to 2012. The correlation between S&P 500 and the EAFE (Local currency) over the entire period is 0.7927 (for local currency). The correlation between S&P 500 and the EAFE (USD) over the entire period is 0.7805. You are asked to present three computations: (a) The currency effect of investing in these market indices over the entire period. (5 points) (b) Risk and performance of the indices over the entire period. (5 points) (c) Graphically depict the benefits the investor derives from investing in these market indices (S&P 500 and EAFE) assuming both are denominated in USD. You should show your workings. (5 points) Formatting suggestion: This graph may be generated using a spreadsheet program or other software. If you hand-draw the graph, take a picture of the graph and insert the gif/jpeg file into your submission document before converting it into a PDF file. Question 3: Table. S&P 500 MEAN STD EAFE (Local Currency) MEAN STD EAFE (USD) MEAN STD 4.51% 1991 2.33% 4.56% 0.82% 4.61% 1.12% 1992 0.63% 2.15% -0.45% 3.37% -0.96% 1993 0.82% 1.75% 2.27% 2.52% 1994 0.15% 3.05% -0.09% 3.50% 0.71% 1995 2.70% 1.50% 0.84% 3.42% 0.98% 1996 1.78% 3.14% 0.96% 2.86% 0.54% 1997 2.52% 4.60% 1.19% 4.73% 0.27% 1998 2.30% 6.21% 1.17% 6.03% 1.71% 1999 1.67% 3.78% 2.51% 3.59% 2.09% 2000 -0.68% 4.95% -0.57% 2.92% -1.17% 2001 -0.90% 5.7396 -1.3396 4.9896 -1.859 2002 -1.90% 5.96% -2.31% 5.69% -1.27% 2003 2.17% 3.29% 1.66% 3.97% 2.87% 2004 0.88% 2.11% 1.04% 1.67% 1.61% 2005 0.42% 2.29% 2.22% 2.78% 1.14% 2006 1.24% 1.63% 1.34% 2.61% 2.04% 2007 0.48% 2.79% 0.35% 2.49% 0.96% 2008 -3.60% 6.07% -3.94% 6.76% -4.28% 2009 2.17% 6.43% 2.04% 5.60% 2.62% 2010 1.32% 5.56% 0.52% 4.37% 0.86% 2011 0.27% 4.60% -0.97% 3.85% -0.89% 2012 1.29% 3.04% 1.44% 3.56% 1.49% MEAN: average monthly returns; STD: standard deviation of monthly returns 5.34% 4.21% 5.15% 3.76% 3.69% 2.09% 4.65% 5.67% 3.65% 3.92% 4.9496 5.48% 4.22% 2.73% 2.89% 2.70% 2.79% 7.83% 7.43% 6.62% 5.64% 4.79% The data given to you in the following table contains the average monthly returns and standard deviations for the S&P 500 index (in USD) and. EAFE index (in Local currency and USD) for the period 1991 to 2012. The correlation between S&P 500 and the EAFE (Local currency) over the entire period is 0.7927 (for local currency). The correlation between S&P 500 and the EAFE (USD) over the entire period is 0.7805. You are asked to present three computations: (a) The currency effect of investing in these market indices over the entire period. (5 points) (b) Risk and performance of the indices over the entire period. (5 points) (c) Graphically depict the benefits the investor derives from investing in these market indices (S&P 500 and EAFE) assuming both are denominated in USD. You should show your workings. (5 points) Formatting suggestion: This graph may be generated using a spreadsheet program or other software. If you hand-draw the graph, take a picture of the graph and insert the gif/jpeg file into your submission document before converting it into a PDF file. Question 3: Table. S&P 500 MEAN STD EAFE (Local Currency) MEAN STD EAFE (USD) MEAN STD 4.51% 1991 2.33% 4.56% 0.82% 4.61% 1.12% 1992 0.63% 2.15% -0.45% 3.37% -0.96% 1993 0.82% 1.75% 2.27% 2.52% 1994 0.15% 3.05% -0.09% 3.50% 0.71% 1995 2.70% 1.50% 0.84% 3.42% 0.98% 1996 1.78% 3.14% 0.96% 2.86% 0.54% 1997 2.52% 4.60% 1.19% 4.73% 0.27% 1998 2.30% 6.21% 1.17% 6.03% 1.71% 1999 1.67% 3.78% 2.51% 3.59% 2.09% 2000 -0.68% 4.95% -0.57% 2.92% -1.17% 2001 -0.90% 5.7396 -1.3396 4.9896 -1.859 2002 -1.90% 5.96% -2.31% 5.69% -1.27% 2003 2.17% 3.29% 1.66% 3.97% 2.87% 2004 0.88% 2.11% 1.04% 1.67% 1.61% 2005 0.42% 2.29% 2.22% 2.78% 1.14% 2006 1.24% 1.63% 1.34% 2.61% 2.04% 2007 0.48% 2.79% 0.35% 2.49% 0.96% 2008 -3.60% 6.07% -3.94% 6.76% -4.28% 2009 2.17% 6.43% 2.04% 5.60% 2.62% 2010 1.32% 5.56% 0.52% 4.37% 0.86% 2011 0.27% 4.60% -0.97% 3.85% -0.89% 2012 1.29% 3.04% 1.44% 3.56% 1.49% MEAN: average monthly returns; STD: standard deviation of monthly returns 5.34% 4.21% 5.15% 3.76% 3.69% 2.09% 4.65% 5.67% 3.65% 3.92% 4.9496 5.48% 4.22% 2.73% 2.89% 2.70% 2.79% 7.83% 7.43% 6.62% 5.64% 4.79%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started