13. A Swiss company considers to invest in the United States. It expects that, at the rele- vant horizon, the CHF/USD exchange rate will be either 0.75 (exchange rate scenario L) or 1.25 (scenario H) and assesses both scenarios to be equally likely. The firm also considers different scenarios with respect to the state of the US economy. Either, the economy is going well (boom" [B]) and the Swiss firm will earn USD 1,000. Or, the economy will be slowing down (recession" [R]) and the Swiss firm will only have a cash flow of USD 500. For the following combinations of scenarios compute the firm's ex- pected CHF cash flow, the firm's CHF/USD exposure, and verify that forward hedging based on the computed exposure does not change the expected value: (a) Conditional on the FX scenario H, the probability is 50% for B and 50% for R. Conditional on the FX scenario L, the probability is 50% for B and 50% for R. (b) Conditional on the FX scenario H, the probability is 30% for B and 70% for R. Conditional on the FX scenario L, the probability is 70% for B and 30% for R. (c) Conditional on the FX scenario H, the probability is 10% for B and 90% for R. Conditional on the FX scenario L, the probability is 90% for B and 10% for R. (d) Conditional on the FX scenario H, the probability is 0% for B and 100% for R. itional on the FX scenario L, the probability is 100% for B and 0% for R. Co 13. A Swiss company considers to invest in the United States. It expects that, at the rele- vant horizon, the CHF/USD exchange rate will be either 0.75 (exchange rate scenario L) or 1.25 (scenario H) and assesses both scenarios to be equally likely. The firm also considers different scenarios with respect to the state of the US economy. Either, the economy is going well (boom" [B]) and the Swiss firm will earn USD 1,000. Or, the economy will be slowing down (recession" [R]) and the Swiss firm will only have a cash flow of USD 500. For the following combinations of scenarios compute the firm's ex- pected CHF cash flow, the firm's CHF/USD exposure, and verify that forward hedging based on the computed exposure does not change the expected value: (a) Conditional on the FX scenario H, the probability is 50% for B and 50% for R. Conditional on the FX scenario L, the probability is 50% for B and 50% for R. (b) Conditional on the FX scenario H, the probability is 30% for B and 70% for R. Conditional on the FX scenario L, the probability is 70% for B and 30% for R. (c) Conditional on the FX scenario H, the probability is 10% for B and 90% for R. Conditional on the FX scenario L, the probability is 90% for B and 10% for R. (d) Conditional on the FX scenario H, the probability is 0% for B and 100% for R. itional on the FX scenario L, the probability is 100% for B and 0% for R. Co