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Suppose a U . S . investor wishes to invest in a British firm currently selling for 3 4 per share. The investor has $

Suppose a U.S. investor wishes to invest in a British firm currently selling for 34 per share. The investor has $6,800 to invest, and the current exchange rate is $2 per . Consider three possible prices per share at 30,35, and 40 after 1 year. Also, consider three possible exchange rates at $1.70 per , $2 per , and $2.30 per after 1 year. Use Excel to calculate the standard deviation of both the pound- and dollar-denominated rates of return if each of the nine outcomes (three possible prices per share in pounds times three possible exchange rates) is equally likely.

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