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

Which of the following conclusions are correct?

	a.	Most of the volatility of the dollar value of the Israeli asset can be removed by hedging exchange risk because b2[Var(S)] and Var(e) are 236,717 ($)2 and 493,751 ($)2 respectively.
	b.	Most of the volatility of the dollar value of the Israeli asset cannot be removed by hedging exchange risk because b2[Var(S)] and Var(e) are 8.22 ($)2 and 59,211 ($)2, respectively.
	c.	Most of the volatility of the dollar value of the Israeli asset can be removed by hedging exchange risk because b2[Var(S)] and Var(e) are 8.22 ($)2 and 59,211 ($)2 respectively.
	d.	Most of the volatility of the dollar value of the Israeli asset cannot be removed by hedging exchange risk because b2[Var(S)] and Var(e) are 236,717 ($)2 and 493,751 ($)2 respectively.