A U.S. firm holds an asset in France and faces the following scenario:State 1 State 2 State 3 State 425% 25% 25%Probability 25%Spot rate $1.26/€$1.24/€$1.17/€P$1.12/€€1800 €1400 €1300 €1100In the above table, P is the euro price of the asset held by the U.S. firm.What is the variance of the spot rate (X.XXXXX)

Variance helps in understanding the spread of the data from its average. Mean and Variance is…

A U.S. firm holds an asset in France and faces the following scenario: State 1 State 2 State 3 State 4 Probability 25% 25% 25% 25% Spot rate $1.26/€ $1.24/€$1.17/€ $1.12/€ P €1800 €1400 €1300 €1100 In the above table, P is the euro price of the asset held by the U.S. firm. What is the variance of the spot rate (X.XXXXX)

A U.S. firm holds an asset in France and faces the following scenario: State 1 State 2 State 3 State 4 Probability 25% 25% 25% 25% Spot rate $1.26/€ $1.24/€$1.17/€ $1.12/€ P €1800 €1400 €1300 €1100 In the above table, P is the euro price of the asset held by the U.S. firm. What is the variance of the spot rate (X.XXXXX)

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter11: Managing Transaction Exposure

Section: Chapter Questions

Problem 7QA

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