Discussion Questions Assess the factors that contribute to someone being risk averse and how risk aversion may be diminished for investors. Explain how a given investor chooses an optimal portfolio and the most significant driver that determines if a diversified or single asset will be used.
Homework Problems: • Chapter 3: Problems 3, 4, and 5 • Chapter 7: Problems 3(a-d), 7(a-e), and 8
Homework Problem #3 3. Using published sources (for example, The Wall Street Journal, Barron’s, Federal Reserve Bulletin), look up the exchange rate for U.S. dollars with Japanese yen for each of the past 10 years ( you can use an average for the year or a specific time period each year). Based on these exchange rates, compute and discuss the yearly exchange rate effect on investment in Japanese stocks by a U.S. investor.