Over the next 30 days, economists forecast that the pound may weaken relative to the dollar by

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Over the next 30 days, economists forecast that the pound may weaken relative to the dollar by as much as 7%, or it may strengthen by as much as 6%. The possible rates of change are -7%, -5%, -3%, -1%, 0%, 2%, 4%, and 6%. If these values are equally likely, what are the mean and standard deviation of the future spot exchange rate if the current rate is $1.5845/£?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
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International Financial Management

ISBN: 978-0132162760

2nd edition

Authors: Geert Bekaert, Robert J. Hodrick

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