Investments, tenth edition

  eXcel  APPLICATIONS:    International Portfolios 

  T

 his Excel model provides an efficient frontier analysis 

similar to that in Chapter 6. In Chapter 6 the frontier 

was based on individual securities, whereas this model 

examines the returns on international exchange–traded 

funds and enables us to analyze the benefits of interna-

tional diversification. Go to the Online Learning Center at 

  www.mhhe.com/bkm   .    

  Excel Questions 

    1.  Find three points on the efficient frontier corresponding 

to three different expected returns. What are the portfolio 

standard deviations corresponding to each expected return?  

   2.  Now assume that the correlation between the S&P 500 and 

the other country indexes is cut in half. Find the new stan-

dard deviations corresponding to each of the three expected 

returns. Are they higher or lower? Why?