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17. Consider two Australian firms listed on the Sydney stock exchange: Company A. Its stock...

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17. Consider two Australian firms listed on the Sydney stock exchange: Company A. Its stock return shows a consistent negative correlation with the euro per A$ exchange rate. The stock price of Company A (in Australian dollars) tends to go up when the Australian dollar depreciates relative to the euro Company B. Its stock return shows a consistent positive correlation with the euro per AS exchange rate. The stock price of Company B (in Australian dollars) tends to go down when the Australian dollar depreciates relative to the euro. A European investor wishes to buy Australian stocks but is unsure about whether to invest in Company A or Company B. She is afraid of a depreciation of the Australian dollar. Which of the two investments would offer some protection against a weakening Australian dollar

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