– For the portfolios, compute the returns, standard deviations and coefficient of
risk variation.
– Analyze the risk and return patterns and diversification benefits.
– Based on the risk/return analysis, which portfolio selections are the most
profitable?
– How do the portfolios’ performances compare to the SP 500’s?
– What are the advantages and disadvantages of including international stocks
in the portfolio?
– If Mr. Smith chooses to include foreign stocks in the portfolio, how can he use
derivatives to hedge against currency risk which can be present from
international investing?