Question
A U.S. firm holds an asset in Israel and faces the following scenario in Israeli Shaekel (IS): Probability Case 1 Case 2 Case 3 25%
A U.S. firm holds an asset in Israel and faces the following scenario in Israeli Shaekel (IS): Probability Case 1 Case 2 Case 3 25% 50% 25% Spot Price($/IS)0.3000 ($/IS)0.2000 ($/IS)0.1500 Israeli Shaekel price of asset held by U.S. Firm IS2000 IS5000 IS3000 U.S. Dollar price of the same asset $600 $1000 $450 What is the Exposure (Regression Coefficient Beta) Coefficient? Hint: Calculate the expression: covariance of the U.S. dollar price of the Israeli asset divided by the variance of the ($/Israeli Shaekel) exchange rate. |
a. | -52.6316 |
b. | 1,289.80 |
c. | 12,898.00 |
d. | None of the above. |
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