Now suppose the investor in Problem 3 also sells forward 5,000 at a forward exchange rate of

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Now suppose the investor in Problem 3 also sells forward £5,000 at a forward exchange rate of

$2.10/£.

a. Recalculate the dollar-denominated returns for each scenario.

b. What happens to the standard deviation of the dollar-denominated return? Compare it to both its old value and the standard deviation of the pound-denominated return.? L042

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ISE Investments

ISBN: 9781266085963

13th International Edition

Authors: Zvi Bodie, Alex Kane, Alan Marcus

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Question Posted: Jul 31, 2024 08:01 AM

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Now suppose the investor in Problem 3 also sells forward 5,000 at a forward exchange rate of

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ISE Investments

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