You are an investment advisor to a wealthy Swiss family who wish to extend their exposure to stocks traded abroad. You use a model of the Swiss asset market that has a. factor structure with two factors, f1 and f2, both with zero mean. Factor 1 represents returns on domestic Swiss investment, factor 2 represents returns on international investment (including any currency conversions). Your clients have access to three assets: the risk- free bond G with rate Ta = 4 (per cent), and two well~diversied funds K and N with returns fps = 6 + 2.5f1 + 0.5f2; 3\