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You are an investor based in Denmark, and you expect the U.S. dollar to depreciate by 3% over the next year. The interest rate on
You are an investor based in Denmark, and you expect the U.S. dollar to depreciate by 3% over the next year. The interest rate on one-year risk-free bonds is 4.5% in the United States, and 3.75% in Denmark. The current exchange rate is Dkr 6.35 per U.S. dollar. You buy some U.S. stocks with an expected return of 7% in dollars. What is the risk premium on the U.S. stock from a U.S. viewpoint and from the Danish investor's viewpoint. 7.0%; 4.5% -2.25%; 0.25% 0.25%; 2.5% 2.5%; 0.25% You are an investor based in Denmark, and you expect the U.S. dollar to depreciate by 3% over the next year. The interest rate on one-year risk-free bonds is 4.5% in the United States, and 3.75% in Denmark. The current exchange rate is Dkr 6.35 per U.S. dollar. You buy some U.S. stocks with an expected return of 7% in dollars. What is the risk premium on the U.S. stock from a U.S. viewpoint and from the Danish investor's viewpoint. 7.0%; 4.5% -2.25%; 0.25% 0.25%; 2.5% 2.5%; 0.25%
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