Question
Missoula, Inc., decides to borrow Japanese yen for one year. The interest rate on the borrowed yen is 9 percent. Missoula has developed the following
Missoula, Inc., decides to borrow Japanese yen for one year. The interest rate on the borrowed yen is 9 percent. Missoula has developed the following probability distribution for the yen's degree of fluctuation against the dollar: POSSIBLE DEGREE OF FLUCTUATION OF YEN AGAINST THE DOLLAR PROBABILITY
Given this information, what is the expected value of the effective financing rate of the Japanese yen from Missoula's perspective? Do not round intermediate calculations. Round your answer to two decimal places.
| POSSIBLE DEGREE OF FLUCTUATION OF YEN AGAINST THE DOLLAR | PROBABILITY | ||
| -4 | % | 20 | % |
| -1 | 30 | ||
| 1 | 10 | ||
| 4 | 40 | ||
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Multinational Finance
Authors: Kirt Butler
2nd Edition
0324004508, 978-0324004502
