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Asset and Currency Correlation. A US investor is considering an investment in Thailand. Th...

Asset and Currency Correlation. A US investor is considering an investment in Thailand. The investor has studied portfolio theory in graduate school and explains his rationale as follows: “For US investors, Thai stocks—exporters mostly—offer a unique profile. The negative correlation between the Bhat and the stock market—because companies tend to do well when the Bhat is down—offers built-in diversification.” Evaluate the merits of this position.

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Solutions For Problems in Chapter 15