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Required: Suppose a US. investor wishes to invest in a British firm currently selling for 80 per share. The investor has $16,000 to invest, and
Required: Suppose a US. investor wishes to invest in a British firm currently selling for 80 per share. The investor has $16,000 to invest, and the current exchange rate is $2/. Consider three possible prices per share at 77, 82, and 87 after 1 year. Also, consider three possible exchange rates at $1.60/, $2/, and $2406: after 1 year. Calculate the standard deviation of both the pound- and dollar-denominated rates of return if each ofthe nine outcomes (three possible prices per share in pounds times three possible exchange rates) is equally likely. (Do not round intermediate calculations. Round your percentage answers to 2 decimal places.) Standard deviation of pounddenominated return "/o Standard deviation of dollardenominated return "/o
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