Determine which of these countries are suitable for a US based investor to diversifv into. Show the necessarv calculations

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter22: Inflation
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Problem 31CTQ: If a government gains from unexpected inflation when it borrows, why would it choose to offer...
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The table below contains the average returns, standard deviation of returns and correlation of returns with US index
for different countries. All data are in US dollar terms. The US T-Bill rate is 3%. Determine which of these
countries are suitable for a US based investor to diversifv into. Show the necessarv calculations

US T-Bill Rate %3

US T-Bill Rate %
Country
USA
Canada
UK
France
Italy
Spain
Russia
South Africa
Egypt
Japan
Singapore
Hong Kong
India
Return %
3
13.69
5.84
5.89
6.33
7.45
11.26
14.64
7.84
23.62
9.02
2.3
11.82
8.14
StDev. %
20
34.4
27.11
25
34.76
26.93
25.1
30.74
27.9
21.3
22.67
22
32.33
Correlation
with USA
1
0.8
0.75
0.72
0.59
0.57
0.33
0.47
0.26
0.45
0.54
0.48
0.36
Transcribed Image Text:US T-Bill Rate % Country USA Canada UK France Italy Spain Russia South Africa Egypt Japan Singapore Hong Kong India Return % 3 13.69 5.84 5.89 6.33 7.45 11.26 14.64 7.84 23.62 9.02 2.3 11.82 8.14 StDev. % 20 34.4 27.11 25 34.76 26.93 25.1 30.74 27.9 21.3 22.67 22 32.33 Correlation with USA 1 0.8 0.75 0.72 0.59 0.57 0.33 0.47 0.26 0.45 0.54 0.48 0.36
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