What is firm-specific risk component for the foreign asset

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Reference no: EM131816294

1. U.S. market portfolio:

Variance: 0.06

Foreign asset:

Variance estimated based on dollar rate of return: 0.10

Correlation Coefficient (estimated based on dollar rate of return) between the U.S. market portfolio and the foreign asset: .30

What is the firm-specific risk component for the foreign asset?

a. .190

b. .155

c. .091

d. .011

e. .022

2. "If an investor can obtain less of a foreign currency for a dollar in the forward market than in the spot market, then the foreign currency is said to be selling at a forward premium." True or false?

Reference no: EM131816294

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