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

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5. 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.

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Investments

ISBN: 9780077261450

8th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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Question Posted: Jul 24, 2024 08:01 AM

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

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Investments

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