Specialization in trade – based on ricardo’s theory: given that two nations have equal resources and both nations agree to specialize in the production of a product that is most efficient, determine: a) specialization between the two nations (which nation specializes in which product? ) b) the range of terms of trade (trade negotiation terms) c) the best of terms of trade (democratic distribution of trade benefit) d) the net benefit for each country (after specialization) e) discuss the limitations of production and export based on such assumption in the current global economy use the following data to answer the above questions

Monthly price data for mdltx and ekwax from yahoo finance is contained in the excel spreadsheet for this exercise. there are 37 months of price data for the period from september 2009 to september 2012. (note: these prices already incorporate dividend payments.) the 36 monthly returns for each fund are also provided. calculate average (arithmetic) monthly return and standard deviation for each fund. you can use the excel functions average, stdev to derive these stats. annualize these statistics. use the correl function in excel to derive the correlation coefficient between the two sets of returns. (annual correlation is the same as monthly correlation. hence, no need to annualize this stat.) using the annualized statistics derived in step 1, compute the expected return and standard deviation for portfolios containing from 0% to 100% mdltx (and 100% to 0% ekwax) by 10% increments. graph the resulting portfolios. based on your analysis, is there any potential benefit to diversification across these two funds? explain. of the 11 portfolios you graphed, which are efficient?