2. Suppose you are an American venture capitalist holding a major stake in an e-commerce start- up in the U.K. As an American resident, you are concerned with the pound value of your U.K. equity position. Assume there are four possible outcomes, each equally likely. The values are as follows: P P(F) S P=P(F)*S 0.25 18,000 $ 1.55 $ 27,900 0.25 9,000 $ 1.51 $ 13,590 0.25 12,000 $ 1.43 $ 17,160 0.25 20,000 $ 1.47 $ 29,400 Mean $ 1.49 $ 22,013 A. Estimate your exposure (b) to the exchange risk B. Compute the variance of the dollar value of your U.K. equity position that is attributable to the exchange rate uncertainty C. Compute the residual variance after the hedge is in place (VAR(e)). D. What is the net amount for each outcome after the hedge is placed? Assume the forward rate is $1.49/ 2. Suppose you are an American venture capitalist holding a major stake in an e-commerce start- up in the U.K. As an American resident, you are concerned with the pound value of your U.K. equity position. Assume there are four possible outcomes, each equally likely. The values are as follows: P P(F) S P=P(F)*S 0.25 18,000 $ 1.55 $ 27,900 0.25 9,000 $ 1.51 $ 13,590 0.25 12,000 $ 1.43 $ 17,160 0.25 20,000 $ 1.47 $ 29,400 Mean $ 1.49 $ 22,013 A. Estimate your exposure (b) to the exchange risk B. Compute the variance of the dollar value of your U.K. equity position that is attributable to the exchange rate uncertainty C. Compute the residual variance after the hedge is in place (VAR(e)). D. What is the net amount for each outcome after the hedge is placed? Assume the forward rate is $1.49/