The correct answer is      (E.)  Namibia

Most investors have never heard of Namibia, a country half the size of Alaska located on the southwestern coast of Africa. But they might be surprised to hear that the tiny Namibian stock market is up more than +200% since the S&P 500 hit its October 11, 2007 high. That's impressive -- particularly when you consider the S&P 500 is down more than -15% since that date.

Namibia may be in one of the world's poorest regions, but it's a nation of extraordinary natural resource wealth -- including uranium, lead and diamonds. It is also one of several up-and-coming countries known as "frontier markets" -- a group made up of undeveloped nations with staggering growth potential. Many are showing economic growth of +7-14% annually. As these economies grow and consumers become wealthier, there are a myriad of opportunities for businesses to expand. This growth is reflected in market performance -- the Merrill Lynch Frontier Markets Index, for instance, has handily outperformed the S&P 500 over the past five years, offering a total return approaching +60% annually.

Many investors shun frontier markets, assuming these countries are a risky bet. And until recently, investing in these markets was nearly impossible for American investors. As a result, only institutional players could really buy into these exciting growth stories. But that has changed. Many markets now welcome foreign investment, and new U.S.-listed exchange-traded funds (ETFs) finally give individual investors direct access to these exciting markets. Today, putting a portion of your portfolio into frontier markets is not the risky proposition it used to be. In fact, it's a great way to diversify.