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Please explain how to solve question 30. Use the information in the following table for questions 30 and 31. Assume that the expected change in
Please explain how to solve question 30.
Use the information in the following table for questions 30 and 31. Assume that the expected change in the $/ exchange rate, x(t) = 5% over the same holding period. You are given the holding-period return (HPR) for the British stock BP for the three possible future states of the economy: State of the economy Probability HPR of BP Boom 0.3 18% Normal Growth 0.5 12% Recession 0.2 -5% 30. (4 points) What is the expected holding-period return for holding BP stock for a UK investor? A. 10.40% B. 9.32% C. 11.63% D. 11.54% E. None of the above. 31. (4 points) What is the expected holding-period return for holding BP stock for a US investor? A. 17.21% B. 14.79% C. 17.12% D. 15.92% E. None of the above
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