X and Y are domestic stocks in country X and country Y, respectively. The mean and standard deviation (SD) of monthly returns, over a given period of time, for the stock markets of two countries, X and Y are Country X: mean = 1.57%, SD = 4.87% Country Y: mean = 1.92%, SD = 7.64% Assuming that the monthly risk-free interest rate is 0.4%, what are the Sharpe performance measures, SHP(X) and SHP(Y)? Which one is superior?

Continue from the previous problem. Assuming you are now constructing an international portfolio by including securities from both country X and country Y, with equal weights.

(Please round your answer to 3 decimal places.)

a. What is your portfolio return? %. b. Assuming the standard deviation of your portfolio is 4.5. What is the Sharpe performance measure of your international portfolio? . c. What are the gains from your international diversification compared to domestic investment in country X and country Y, respectively? Gains are measured as the increase in the portfolio return at the domestic-equivalent risk level) Gains compared with country X= Gains compared with country Y=