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Assume that Politico Co. (a U.S. firm) measures its economic exposure to movements in the British pound by applying regression analysis to data over the

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Assume that Politico Co. (a U.S. firm) measures its economic exposure to movements in the British pound by applying regression analysis to data over the last 36 quarters: SP=bO+b1e+u where SP represents the percentage change in Politico's stock price per quarter, e represents the percentage change in the British pound value per quarter, and u is an error term. Based on the analysis, the b0 coefficient is estimated to be zero and the b1 coefficient is estimated to be 0.8 and is statistically significant. Politico Co. believes that the movement in the value of the pound over the next quarter will be mostly driven by the International Fisher Effect. The prevailing quarterly interest rate in the U.K. is LOWER than the prevailing quarterly interest rate in the U.S. Would you expect that Politico's value will be favorably affected, unfavorably affected, or not affected by the pound's movement over the next quarter? Unfavorably affected. Favorably affected. Not affected

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