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Assume a firm's home currency is British pounds. Let the current spot FX rate be 1.70 $/E and the expected revenues be 500 per year.

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Assume a firm's home currency is British pounds. Let the current spot FX rate be 1.70 $/E and the expected revenues be 500 per year. Assume that if the FX value of the pound changes to 1.80 $/E, the expected revenue in pounds would change to 750 per year. Compute the company's revenue exposure to the US dollar. 2

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