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Chapter 9 Assignment Sved Help Save & Exit Submit Check my work 1 Problem 9.3...

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Chapter 9 Assignment Sved Help Save & Exit Submit Check my work 1 Problem 9.3 50 Dots Suppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon Valley. As a British resident, you are concerned with the pound value of your US, equity position. Assume that if the American economy booms in the future, your equity stake will be worth $1,001,560, and the exchange rate will be $14/. If the American economy experiences a recession on the other hand, your American equity stoke will be worth $501760, and the exchange rate will be $16/. You assess that the American economy will experience a boom with a 60 percent probability and a recession with a 40 percent probability a. Estimate your exposure to the exchange risk. (Round final answer to nearest dollar.) P Exposure b. Compute the variance of the pound value of your American equilty position that is attributable to the exchange rate uncertainty (Round final answer to nearest dollar.) Varance

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