The table below contains the average returns, standard deviation of returns and correlation of returns with US indexfor different countries. All data are in US dollar terms. The US T-Bill rate is 3%. Determine which of thesecountries are suitable for a US based investor to diversifv into. Show the necessarv calculationsUS T-Bill Rate %3 US T-Bill Rate %CountryUSACanadaUKFranceItalySpainRussiaSouth AfricaEgyptJapanSingaporeHong KongIndiaReturn %313.695.845.896.337.4511.2614.647.8423.629.022.311.828.14StDev. %2034.427.112534.7626.9325.130.7427.921.322.672232.33Correlationwith USA10.80.750.720.590.570.330.470.260.450.540.480.36

Investors are always seeking ways to diversify their portfolio and reduce risk. One of the most…

Answered: Determine which of these countries are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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

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