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MEASURING ECONOMIC EXPOSURE Bag Company, a U . S . firm, has a business of offering cruises along the coast of Argentina that are solely
MEASURING ECONOMIC EXPOSURE Bag Company, a US firm, has a business of offering cruises along the coast of Argentina that are solely geared toward American tourists. The company charges American tourists in US dollars, but all of its expenses, such as payments to its employees, are in Argentine pesos. You want to measure Bag's economic exposure to movements in the peso by applying regression analysis to data over the last quarters: where SP represents the percentage change in Bag's stock price per quarter, e represents the percentage change in the Argentine peso's value per quarter, is an error term, and and are regression coefficients. Do you think the expected sign of the coefficient in the model will be positive and significant, negative and significant, or zero not significant Briefly explain.
MEASURING ECONOMIC EXPOSURE Bag Company, a US firm, has a business of offering cruises along the coast of Argentina that are solely geared toward American tourists. The company charges American tourists in US dollars, but all of its expenses, such as payments to its employees, are in Argentine pesos. You want to measure Bag's economic exposure to movements in the peso by applying regression analysis to data over the last quarters:
where SP represents the percentage change in Bag's stock price per quarter, e represents the percentage change in the Argentine peso's value per quarter, is an error term, and and are regression coefficients. Do you think the expected sign of the coefficient in the model will be positive and significant, negative and significant, or zero not significant Briefly explain.
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