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final.xlsx-Suppose that you hold a real estate in Paris that you may want to sell in one year. As a US investor, you are concerned

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final.xlsx-Suppose that you hold a real estate in Paris that you may want to sell in one year. As a US investor, you are concerned with its dollar value. Assume that if the French economy booms in the future, the land will be worth 2,500, and one euro will be worth $1.2. If the French economy slows down, on the other hand, the land will be worth less, say, 2,000, but the euro will be stronger, say, $1.5/. You feel that the French economy will experience a boom with a 50 percent probability and a slowdown with a 50 percent probability. Estimate your exposure (6 = CordP,5%) to the exchange risk 0 -500 O-1667 O 1667

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