Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can you show formulas in excel please!!!!!!!!!!! Although the Managing Economic Exposure topic is straight forward conceptually, the quantitative part requires careful execution of a

Can you show formulas in excel please!!!!!!!!!!!

Although the Managing Economic Exposure topic is straight forward conceptually, the quantitative part requires careful execution of a series of calculations. We need to make sure that we can successfully calculate variance, covariance, economic exposure coefficient, and standard deviation. Also, we need to make sure that we understand the meaning of the economic exposure coefficient and the standard deviation.

Make sure your submitted work shows your calculations step by step for part a and part c. Also make sure that you explain part b and part c clearly in your own words.

A U.S. firm holds an asset in Italy and faces the following scenario:

State 1 State 2 State 3
Probability 25% 50% 25%
Spot rate $ 2.50 / $ 2.00 / $ 1.60 /
P 1,800 2,250 2,812.50

Mean of spot rate = 2.5 + 2 + 1.6 / 3 = 6.1 / 3 = 2.0333

Mean of price = 1800+ 2250 +2812.5 / 3 = 2287.52

  1. Calculate the economic exposure coefficient.

Covariance / Variance of spot rate= 28.125 / 0.101904 = 275.996

Economic exposure coefficient = 275.996

  1. Explain what the sign of the covariance means.

The sign of the covariance means that.

  1. Calculate the standard deviation of the exchange rate and explain what that number means.

Can you show formulas in excel please!!!!!!!!!!!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Psychology Of Trading Tools And Techniques For Minding The Markets

Authors: Brett N. Steenbarger

1st Edition

0471267619, 9780471267614

More Books

Students also viewed these Finance questions

Question

What is the content-level meaning?

Answered: 1 week ago