California Co must pay 5 million Mexican pesos by tomorrow, in exchange for supplies that it has agreed to purchase from a supplier in Mexico. The peso depreciated today against the dollar by 5 percent. Using time series data of past currency fluctuations, California observes whenever the peso depreciates against the dollar by more than 1 percent, then the peso tends to depreciate again by about 60 percent of the initial change.

Given the results of thefundamental /technicalforecasting by California Co, the firm will most likely decide tomake its payment today instead of tomorrow / make its payment tomorrow instead of today.