Consider the following returns: Period United States {:[" United "],[" Kingdom "]:} Exchange Rate 1 10% 5% $3 2 15% -5% 2.5 3 -5% 15% 2.5 4 12% 8% 2 5 6% 10% 1.5 6 2.5 Note that the exchange rate is stated as beginning of period dollars for pounds. What is the average return in each market from the point of view of a US investor and of a UK investor?
Consider the following returns: Period United States {:[" United "],[" Kingdom "]:} Exchange Rate 1 10% 5% $3 2 15% -5% 2.5 3 -5% 15% 2.5 4 12% 8% 2 5 6% 10% 1.5 6 2.5 Note that the exchange rate is stated as beginning of period dollars for pounds. What is the average return in each market from the point of view of a US investor and of a UK investor?
Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates
Section: Chapter Questions
Problem 19QA
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Consider the following returns: Period United States {:[" United "],[" Kingdom "]:} Exchange Rate 1 10% 5% $3 2 15% -5% 2.5 3 -5% 15% 2.5 4 12% 8% 2 5 6% 10% 1.5 6 2.5 Note that the exchange rate is stated as beginning of period dollars for pounds. What is the average return in each market from the point of view of a US investor and of a UK investor? 6. Given the data in problem 1 , what is the standard deviation of return from the point of view of a US investor and of a UK investor?
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