Expected return for investing in a stock in france

Reference no: EM13827284

Problem:

You are a US who is considering investment in French (stocks A and B) and Swiss (stocks C and D) stock markets. The World market risk premium is 6%. The currency risk premium on the Swiss Franc (CHF) is 1.25% and the currency risk premium on the Euro (EUR) is 2%. The risk-free rate in the US is 3.75%. Given the information below the expected return on Stock A with the US dollar as the base currency is _________%.

Stock	A	B	C	D
Country	France	France	Switzerland	Switzerland
β_w	1	0.9	1	1.5
Υ_EUR	1	0.8	-0.25	-1.0
Y_CHF	-0.25	0.75	1.0	-0.5

Summary of question:

Basically this question belongs to Finance as well as it explains about the expected return for investing in a stock in France by US dollars.

Reference no: EM13827284

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