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Please help ASAP Question 36 (15 points) Blank Excel Worksheet 1 xlsx Suppose you are a British venture capitalist holding a major stake in an
Please help ASAP
Question 36 (15 points) Blank Excel Worksheet 1 xlsx Suppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon Valley. As a British resident, you are concemed with the pound value of your US equity position Assume that if the American economy booms in the future, your equity stake will be worth $2,000,000, and the exchange rate will be $1.40/. If the American economy experiences a recession, on the other hand, your American equity stake will be worth $800,000, and the exchange rate will be $1.60/. You assess that the American economy will experience a boom with a 50 percent probability and a recession with a 50 percent probability (a) Estimate your exposure to the exchange risk (b) Show that your exposure is hedged by buying or selling a forward contract Step by Step Solution
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