What is foreign direct investment. The role of foreign direct investment in the global economy

Summing up, let's say that FDI is the most important part of the financial mechanism that ensures the normal functioning and development of companies. It's hard to even remember another investment instrument, which would have the same impact on a developing company and would help entrepreneurs expand their zone of influence and enter foreign markets.

1. The classification of foreign investments in the Russian Federation includes the following types: direct, portfolio

a) straight,

b) portfolio,

Direct investments (strategic) - the investment of free cash in the share capital of the company, giving the right to participate in management. The task of the investor is to increase the efficiency of the company in order to get more high income for investment. Portfolio investment is the investment of funds in shares in order to generate income by increasing their market value and/or receiving dividends. Return on investment - loans issued by the company's investors.

2. Foreign direct investment includes, among other things, the acquisition by a foreign investor in the authorized (share) capital commercial organization, created or newly created on the territory of the Russian Federation in the form of a business partnership or company in accordance with the civil legislation of the Russian Federation

a) not less than 10% of the share, shares (contribution);

b) not less than 25% of the share, shares (contribution);

c) at least 51% of the share, shares (contribution)

By Russian law“On Foreign Investments” (1999) direct investments include the acquisition by a foreign investor of at least 10% of the share in the authorized capital of a commercial organization created or newly created on the territory of the Russian Federation.

3. The functions of foreign investment include

a) regulatory;

b) control;

c) distribution;

d) savings;

e) stimulating;

f) indicative

In economic theory, the following main functions of investments are distinguished:

1. Regulatory. Investments are capable of correcting the processes of capital reproduction and maintaining their growth rates, developing the most important key sectors of the economy, restructuring the economy, accelerating scientific and technological progress and improving social well-being. Their regulatory function, in fact, extends not only to the processes of production, accumulation and consumption, but also to natural-technical and social phenomena, to the development of infrastructure, that is, to permeate all levels and spheres of society's life.

2. Distribution. Through investment, in essence, the distribution of the created social product in its monetary form between individual owners, levels and areas social production, activities. The nature of distribution processes directly depends on the targets, priorities, tasks set by the state. At the same time, investment, as the realization of distribution relations, corresponds to the goals of the life of society, expresses the form of appropriation economic benefits, and is also used as a way to resolve social contradictions.

3. Stimulating. Investment is focused on updating the means of production, on the activation of its most mobile and rapidly changing elements, on the development of science and technology. In this role, investments, in fact, serve development as such, determine its growth rates and qualitative characteristics.

4. Indicative. The implementation of this investment function allows you to control the movement towards the goal, that is, to develop such regulatory mechanisms that provide, at a minimum, an equilibrium state of the economic system.

Answer: a), c), e), f)

4. List the possible options for investing foreign capital in the capital of Russian enterprises

Foreign investors (Article 3 of the Law) are granted the right to invest in Russia by:

Equity participation in enterprises created jointly with legal entities and citizens of the Russian Federation and other republics;

Establishment of enterprises wholly owned by foreign investors, as well as branches of foreign legal entities;

Acquisition of enterprises, property complexes, buildings, structures, shares in enterprises, shares, shares, bonds and others valuable papers and other property;

Acquisition of rights to use land and other natural resources;

Acquisitions of other property rights;

Other investment activities not prohibited by the legislation in force on the territory of the Russian Federation.

5. The debt obligations of the Russian Federation are repaid on time not exceeding

Debentures Russian Federation can be short-term (up to one year), medium-term (over one year to five years) and long-term (over five years to 30 years).

The debt obligations of the Russian Federation are repaid within the terms determined by the specific terms of the loan and cannot exceed 30 years.

6. State borrowings of the Russian Federation can be attracted from

a) individuals and legal entities,

b) foreign states,

c) international financial organizations

State internal borrowings Russian Federation - according to the legislation of the Russian Federation - loans attracted from individuals and legal entities, foreign states, international financial organizations in the currency of the Russian Federation, for which debentures RF as a borrower or guarantor of repayment of loans by other borrowers.

Answer: a), b), c)

7. Through an infusion of capital that stimulates the economic growth, expresses the impact of foreign investment on the state of public finances

a) direct;

b) indirect

The use of foreign investment allows: to revive the economy; gain access to advanced technologies and management methods; to counteract the increase in the external debt of the state, providing funds for its repayment; stimulate the development of society's own productive forces; promote efficient production and economic recovery, its integration into the world economic system due to industrial and scientific and technical cooperation.

The indirect advantages of foreign investment include: - attraction of new technologies, equipment and know-how; - the opportunity to train specialists, managers and entrepreneurs who own modern technologies management and organization of production; - activation of the export potential of the donor country; - development of regional resources.

8. Legislative or other restrictions on the share of foreign ownership, and control in certain industries are among the means of state regulation of foreign investment

a) direct, or formal;

b) covert or informal

Direct restrictions are restrictions on the activities of foreign firms contained in the legislation.

At the informal level, foreign investment was controlled by mechanisms such as preferences for state-owned enterprises, bans on “seizure of power” and “voluntary restrictions” on transnational corporations.

9. Specify the measures of state regulation of foreign investment, which have the character of relative restrictions

a) percentage restrictions on the share in the authorized capital;

b) requirements for hiring local labor;

c) percentage restrictions on the share in the volume of assets in a particular industry;

d) restrictions on conducting in-house research in the host country.

Answer: b), d)

10. Specific or sectoral permits required by firms in certain sectors are the means of state regulation of foreign investment at the stage

a) approval;

b) investments;

c) project selection;

d) activities

State regulation foreign investment in Russia is carried out not only at the federal level, but also by the authorities of the constituent entities of the Federation, as well as by the local government. This regulation is specific or industry specific.

The main 3 stages of AI: pre-investment (admission, selection), investment (investments), operational (activity).

The authorities of the subjects of the Federation carry out the legal regulation of foreign investment in their territory. Currently, about 50 Russian regions have special laws on foreign investment, in the rest they are regulated by general investment laws adopted almost everywhere.

However, not all laws on foreign investment adopted in the regions have been brought into full compliance with federal legislation. There is a discrepancy in the laws and between the regions themselves. Some of them try to regulate the activities of foreign investors by giving local authorities excessive bureaucratic prerogatives and exercising excessive administrative control. So, in St. Petersburg, the passage of only the first stage of approval of an investment project takes at least 8 months for a reputable foreign investor with the necessary connections. That is, the project selection stage refers to specific permits.

11. Specify means state control over the admission and activities of foreign investments related to prohibited measures in world practice and legislation

a) environmental protection requirements;

b) control over the export from the host country of products produced by enterprises with foreign investment;

c) restrictions related to the hiring of foreign labor

From the point of view of the regulation of their rights, migrant workers should be considered as local workers. In particular, they are not subject to the maximum quotas of foreign labor force established in most EU countries in relation to non-EU countries, for migrant workers from the EU it is forbidden to establish special conditions for employment (with the exception of the requirement of good knowledge of the language of the host country for certain types of work ), they should be subject to the same selection criteria that exist for local workers, in no case should educational or other requirements of a discriminatory nature be put forward Migrant workers enjoy trade union rights on an equal basis with local workers, in particular the right to be elected to the governing body of the trade union, to the workers' representative body. However, they are not entitled to participate in the management of institutions governed by public law, for example, to be members of state courts.

Federal Law "On legal status foreign citizens in the Russian Federation” was adopted on July 25, 2002 and entered into force on November 1, 2002 (hereinafter referred to as the Law). Art. 13 of the Law determines that foreign citizens enjoy the right to freely dispose of their abilities to work, subject to the restrictions provided for federal law. These restrictions are based on the principle of priority use of national labor resources, which over the next two years will determine the activities of public authorities in the labor market.

Restrictions related to the hiring of foreign labor are considered prohibited in world practice.

12. Providing foreign investors with preferential loans or loan guarantees is

a) fiscal stimulus;

b) financial incentive;

c) other incentive.

AT modern conditions most important species The specific incentives for foreign investors are as follows:

Fiscal incentives: tax holidays, income tax incentives, incentives for funds used for investment and reinvestment, accelerated depreciation regime, income tax incentives for foreign employees of enterprises with foreign participation, incentives for R&D activities, incentives in the implementation of foreign trade operations and others;

Financial incentives: payment of government subsidies to cover part of the start-up costs, the provision of soft loans or loan guarantees, the provision of preferential conditions state insurance, state participation in share capital;

Other incentives - government spending for the creation of investment infrastructure, the creation of zones with a special economic status and others.

13. Relationship between internal return (rv), external return (ri) and return on investments in foreign currency(rr) can be shown using the following expression

a) rv + ri = rr ;

b) rv + rr = ri;

c) rr + ri = rv.

1 + ri = (1 + rv)(1 + rr)

In turn, this equation can be rewritten in the following form: ri = rv + rr + rv rr (*)

The last term in this equation (r in rr) will be less than the previous two, since it is equal to their product, and they are both less than one. Thus, the equation (*) can be represented as follows: ri = rv + rr (**)

Equation (**) shows that the expected return on a foreign security is approximately equal to the sum of the expected internal return and the return on investing in foreign currency.

14. An American investor purchases bills of the Russian Federation with a value of 120 thousand rubles at the beginning and at the end of the period. and 150 thousand rubles. respectively. The exchange rate at the beginning of the period was 29.05 rubles. per dollar and by the end of the period rose to 31.12 rubles. per dollar. The external return on these investments will be

e) other meaning (specify)

Let the bill rate in dollars be equal to P0 at the beginning of the period and P1 at the end of the period (nominal value). Then the return for a resident, or internal return, rv is calculated by the formula:

rv = (Р1 -Р0)/Р0

The external return (i.e. the return to the foreign investor) is denoted as ri and is expressed as in the following way:

ri = (X1 P1 – X0P0) / X0P0

ri \u003d (150 * 31.12-120 * 29.05) / (120 * 29.05) \u003d 0.339

15. Determine the amount of lease payments by years and the total amount under the lease agreement based on the following data

Table 1

1. Calculation of the average annual value of the property

2. Calculation of the total amount of lease payments by years

PC \u003d 519995 x 18: 100 \u003d 93599.1 rubles.

KV \u003d 519995 x 15: 100 \u003d 77999.25 rubles.

DU \u003d 12000: 3 \u003d 4000 rubles.

B \u003d 52000 + 93599.1 + 77999.25 + 4000 \u003d 227598.35 rubles.

VAT \u003d 227598.35 x 18: 100 \u003d 40967.703 rubles.

LP \u003d 227598.35 + 40967.703 \u003d 268566.053 rubles.

AO \u003d 520000 x 10: 100 \u003d 52000 rubles.

PC \u003d 519985 x 18: 100 \u003d 93597.3 rubles.

KV \u003d 519985 x 15: 100 \u003d 77997.75 rubles.

DU \u003d 12000: 3 \u003d 4000 rubles.

B \u003d 52000 + 93597.3 + 77997.75 + 4000 \u003d 227595.05 rubles.

VAT \u003d 227595.05 x 18: 100 \u003d 40967.109 rubles.

LP \u003d 227595.05 + 40967.109 \u003d 268562.159 rubles.

AO \u003d 520000 x 10: 100 \u003d 52000 rubles.

PC \u003d 519975 x 18: 100 \u003d 93595.5 rubles.

KV \u003d 519975 x 15: 100 \u003d 77996.25 rubles.

DU \u003d 12000: 3 \u003d 4000 rubles.

B \u003d 52000 + 93595.5 + 77996.25 + 4000 \u003d 227591.75 rubles.

VAT \u003d 227591.75 x 18: 100 \u003d 40966.515 rubles.

LP \u003d 227591.75 + 40966.515 \u003d 268558.265 rubles.

The total amount of leasing payments for the entire term of the leasing agreement:

LP + LP + LP = 268566.053 + 268562.159 +

268558.265 = 805686.477 rubles

The amount of leasing payments:

805686.477: 3: 4 \u003d 67140.53975 rubles.

16. Specify the features of the approach to intensify FDI inflows, which consists in the use of special incentive measures

A. creating conditions for large-scale long-term investment growth;

B. saving time and money to attract investment;

C. lack of rapid effect from the activities;

D. Fostering an uneven playing field for Russian and foreign investors

Answer: A), B)

17. List mandatory characteristics, which should meet the policy of Russia in relation to AI

Russian policy towards AI should take into account the following factors:

Economic conditions (the state of the macroeconomic environment, GDP dynamics, national income, production volumes industrial products; inflation, the development of high-tech industries, the situation in the labor market, the situation in the monetary, financial, budgetary, tax, currency systems, etc.)

State investment policy(the degree of state support for foreign investment, the possibility of nationalization of foreign property, participation in international treaties, compliance with agreements, continuity of political power, stability state institutions and the effectiveness of their activities, etc.);

Legal framework investment activity(the status of regulatory documents and the procedure for their adjustment, parameters for the input and output of investments from the country, tax, currency and customs regimes, the procedure for creating, registering, operating, reporting, merging and liquidating firms, measures for regulating and controlling their activities, settling disputes);

Informational, factual, statistical material on the status of various factors that determine the investment climate.

18. An American investor bought shares at the beginning of the year Russian company denomination of 820 rubles. on market price 1000 rub. per share. During the year, a dividend (18% per annum) was paid on shares. At the end of the year, the shares were sold at a price of 1020 rubles. per share. At the beginning of the year $1 = 29.02 rubles, at the end of the year $1 = 29.53, at the time of dividend payment $1 = 28.85. Determine the return on investment in this security

Revenue is the difference between revenue and costs. In other words, profit, which means it is measured in monetary units.

Profitability - the ratio of income to costs, estimated in%.

Investing in stocks is a type financial investment, i.e. investing money in financial assets in order to generate income - additional money.

Profitable are those investments in shares that are able to provide income above the market average.

Obtaining just such an income is the goal that the investor pursues by investing in stock market. At the same time, a share can bring income, which, circulating on the stock market, is of interest mainly to a portfolio investor.

Investor B's return is finite (Dxk), because he sold his security and the income for the investment period is measured by the ratio:

B + (C1 - C)

B - current payments on the security;

C - share purchase price;

C1 - sale price;

D - income;

Dhr - current market return;

T1 – the time the share is held by the investor;

Calculate stock dividends

B=(820*18)/100=147.6

Let's find the profitability

D \u003d (147.6 + (1020-1000)) / 1000 * 100 \u003d 16.7%

Answer: 16.7%

19. Indicate company priorities that Russia should follow in implementing forward-looking policy regarding AI

In modern conditions in Russia, the stimulation of large companies occurs along two lines. First, large investments are stimulated by law, and, accordingly, large companies. Secondly, individual agreements are concluded with the largest investor companies (Mars, Cadbury, the Russian-French joint venture Avtoframos). Thus, a certain group of foreign investors is formed, operating to a large extent “above the law”, enjoying a privileged status in the field of legal regulation their activities.

It would be inappropriate to abandon such incentives in principle, since Russia is interested in increasing the inflow of foreign investment. It is hardly possible to change the methods of such stimulation in the coming years. This is due, first of all, to the fact that the Law on Foreign Investments in the Russian Federation only recently (at the end of 1999) established the quantitative parameters of priority projects that stimulate investment. Their elimination or reduction will cause an extremely negative reaction from foreign investors and increase the instability of the situation in the economy. In the longer term, it will be necessary to reduce financial incentives for large foreign giants as much as possible, compensating for these actions by improving the investment climate.

Moreover, in modern conditions it is advisable to establish new criterion incentives - for the implementation of reinvestment. For example, the implementation of reinvestment in the amount of at least 50% of the received profit causes a reduction in the income tax rate of 50%.

Another way of stimulation - through the use of individual agreements - distinguishes not only Russian practice, but is used by many countries. At the same time, it is necessary to change the burden of such agreements in the future. Large investments should be given a green light to an administrative rather than a financial plan.

Small and medium-sized foreign companies interested in the implementation investment projects on the territory of Russia, do not receive benefits provided for by such investment agreements, are forced to act within the framework of general laws and are not protected by special agreements with the government. These groups of investors (as well as Russian investors) are much more in need of improving the overall legislative framework stimulating AI and providing guarantees for the stability of the conditions for investment activity at the federal level. The importance of attracting this group of investors dictates the need to shift efforts from creating more favorable conditions for a narrow circle of companies than provided by law, to improve the legislation itself and administrative regime in order to make it more attractive to the majority of investors.

Since small and medium-sized firms have their own advantages for development Russian economy compared to large firms, they may be granted certain benefits. At the federal level, companies with foreign participation currently enjoy the same benefits as Russian enterprises, i.e. have a national regime. Therefore, the task here is to further improve the conditions and support for small businesses in general. Specific benefits for foreign small businesses should be the preserve of regional and local authorities, who are better aware of the possibilities and areas of application of such businesses in their regions.

20. Main conditions of bilateral investment agreements

A. the conditions of the foreign investment regime in the contracting countries;

B. conditions for admission to certain industries and activities;

C. working conditions for foreign workers;

D. conditions for protecting foreign investors from possible nationalization;

E. registration and licensing conditions;

F. conditions for the transfer of profits and income abroad;

G. conditions for the export of products manufactured at enterprises with the participation of foreign capital;

H. Terms Governing Dispute Resolution.

Bilateral agreements on the protection of investments - these are agreements between two countries on the mutual assistance and protection of investments made by companies located on the territory of the contracting parties. As a rule, such agreements include the following issues: definition of the term "foreign investment", rights in relation to the investment of capital, national treatment for enterprises created by investment, most favored nation treatment, fair and equitable treatment, guarantees and compensation in case of expropriation, guarantees of free transfer funds and repatriation of capital and profits, issues of control over the labor activity of foreign workers, the conditions for registration and licensing, the provision for resolving disputes both at the level of the state against the state, and the investor against the state.

Answer: A), B), D), C), E), F), G), H)

21. Most agreements on mutual protection and promotion of investments contains a condition on the transfer of funds abroad

A. in national currency recipient country;

B. in the national currency of the investor;

C. in convertible currency.

The transfer of funds (money) and the implementation of payments takes place in a timely manner in the currency in which the investments were originally made, or in any other freely convertible currency. Conversion of such funds and payments is carried out at the exchange rate applicable in the territory of the recipient state on the date of transfer of funds (money) and making payments, in compliance with the requirements of the currency legislation of the recipient state.

22. The market value of the portfolio at the beginning of the year was $ 6 million, at the end of the year - $ 7 million, after 182 days part of the shares was sold for $ 3.5 million, at the time of the cash outflow market price portfolio was Pt = $7.5 million. Determine the return on an investment using a time-weighted rate of return

Ri= (7.5-7)/7=0.07 or 7.1%

Answer: 7.1%

23. According to the terms of agreements on mutual protection and promotion of investments, all disputes must be resolved on the basis of mutual consultations or negotiations within

A. a regulated period established by mutual agreement;

B. a single regulated time limit for all countries;

C. not regulated term.

If the dispute cannot be resolved through negotiations within six months from the date of written notification of any of the parties to the dispute about its resolution through negotiations, then it can be submitted at the option of the investor for consideration:

Court of the recipient state, competent to consider the relevant disputes;

International commercial arbitration at the chamber of commerce of any state agreed by the parties to the dispute;

an ad hoc arbitral tribunal which, unless the parties to the dispute otherwise agree, shall be established and operate in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL);

If the dispute is not settled through consultations and negotiations within six months from the date of the official written request for their holding, sent by one of the Parties concerned to the other Party concerned, then, in the absence of other agreement between the Parties concerned regarding the method of resolving the dispute, any of such Parties may apply to the EurAsEC Court for consideration of the dispute. The EurAsEC Court makes a decision on the dispute in accordance with its regulations. Such decision shall be final and binding on all Parties.

Answer: A) a regulated period established on the basis of mutual agreement.

24. The collection of taxes on income or on the economic activity of legal entities and individuals received by a company in different countries is due to:

A. the principle of territoriality;

B. residence principle.

Economic relations of a person and the state determines the principle of permanent residence (residence). According to this principle, taxpayers are divided into:

For persons with permanent residence in a particular state (residents);

Persons who do not have a permanent residence in it (non-residents).

Tax residents bear the full tax liability to their state of residence. They are required to pay tax on income received anywhere, both from sources in the territory of their state of residence, and in the territory of any other country. The resulting double taxation is eliminated by international treaties on the avoidance of double taxation, if such treaties are concluded between states.

Non-residents have a limited tax liability. They pay tax to a particular state only if they receive income from sources in that state. This is the main difference between tax residents and non-residents is supplemented by a number of others.

In accordance with the principle of territoriality, the tax sovereignty of each state tax is realized. All income received in a given territory is subject to taxation in the jurisdiction of their formation. When distributing such income in favor of recipients (recipients) located in a foreign state, special taxes are levied on the repatriation of profits. in which he is registered.

The current legislation provides tax authorities powers to exercise control not only in the field of tax relations, but also in the field of administrative-legal and currency relations. Respectively, tax control should be distinguished from administrative or legal currency control, the possibility of which is provided by law.

The residence principle provides for the tax liability of an individual or legal entity at the place of its location or registration. According to this principle, all income of an economic entity received in all jurisdictions of conduct commercial transactions, are subject to income tax in the country in which the individual or legal entity is resident.

In world practice, the residence principle is more typical for the taxation of individuals. In case if individual exposed double taxation, then foreign states either exempt non-residents from income taxation, or apply reduced tax rates.

25. The principle of residence is beneficial to apply

A. countries - importers of capital;

B. countries - exporters of capital.

It is beneficial for exporting countries to apply the residency principle and pay tax in accordance with this principle.

26. Taxation of passive income under the tax exemption system is carried out

A. similar to the taxation of active income;

B. at reduced rates;

C. no additional benefits.

Active Income from international relations related to the implementation commercial activities on the territory of a foreign state through a permanent representative office or if there is a tax domicile for individuals and legal entities. Income earned by such tax domicile is taxed according to the residency principle. The income of a permanent establishment is taxed on the principle of territoriality. Active income is subject to two main taxes: individual and corporate income tax. If these two taxes do not cover all sources, other taxes apply: on capital gains, property, property, transfer taxes on the transfer of property.

passive income- this is income from equity participation in a foreign enterprise: interest, dividends, royalties. Implementing the principle of territoriality, the state levies taxes on the distribution of profits in favor of a foreign investor (taxes on repatriation), which are withheld from income at the place of their formation before being transferred abroad to the main recipient. The export of profits in the form of dividends is subject to higher taxes than interest and royalties, so it is more profitable to export capital in the form of loans. To minimize revenues, companies convert one form of passive taxation to another within a transnational group.

27. Under the tax credit system, the country of residence is subject to taxation foreign income resident companies as follows

A. demands payment of taxes in his favor;

B. allows the payment of taxes on income from foreign activities in the country - the source of their receipt;

C. provides credit to pay taxes in the source country.

Investment tax credit is such a change in the deadline for paying tax, in which the organization, if there are grounds specified in the Tax Code, is given the opportunity within certain period and, within certain limits, reduce their tax payments, followed by a phased payment of the loan amount and accrued interest.

Answer: B), C)

28. The table shows data on the yield of securities,%:

Rm - which behave like the whole stock market

Rs - shares of small companies.

Necessary:

1 build a CAPM model for the return of small companies at a risk-free rate of return of 7%;

2 to determine the average return and risk of a portfolio in which the shares of small companies are: 15%, and the rest falls on the securities of the entire market

var (Rm) = 6.12/2=3.06;

var(Rs) = 2/2=1;

cov (Rs, Rm) = ½(Rm-Rmav)(Rs-Rsav) = 0;

β = cov (Rs,Rm)/ var (Rm)=0;

β=0 – conservative security;

Rj = rfree + β(Rm – rfree);

Rj = 7 +0 (Rm-7) = 7.

The equation of the CAPM model leads to a quite logical conclusion: if an asset has a zero beta coefficient, which means that it does not have systematic risk, then the risk premium for it will be equal to zero.

2. Average return

Risk is the possibility of deviation of the actual results of the operations performed from the expected ones.

Expected return:

Rk is the probability of realization of the state k

Pk - profitability of the asset when the state k is realized

Speaking about the risk of investments, they mean the possible degree of dispersion ((variability) of the return on the volume of investments relative to its average value. The higher the variability of the return, the higher the risk of operations.

VAR(R)=k=n ∑k=1 Pk (Rk -E[R]))2 – Variance

Ơ(R)=√VAR(R)=√k>n ∑k=1 Pk (Rk -E[R]))2 - standard deviation

E (aRm + bRs) = aE(Rm) + bE(Rs)

a = 0.85; b = 0.15

The average value of securities that behave like the entire stock market E(Rm) = 18.6;

Average value of shares of small enterprises E(Rs) = 15;

Portfolio average

E (aRm + bRs)=0.85*18.6+0.15*15=18.06;

δ2 (Rm) = 6.12/3=2.04;

δ2(Rs)=2/3=0.66;

δ(Rm, Rs) = 0/3 = 0;

δ(aRm+bRs)=aδ2 (Rm) + b δ2 (Rs) + 2abδ(Rm, Rs) = 0.85*2.04+0.15*0.66=1.833;

Portfolio risk δ = 1.35.