Suppose a U.S. firm has an asset in Germany and faces the following scenario: 3 State Probability P* S SxP* 1 1/4 980 $1.40/ $1,372 2 1/4 1,000 $1.50/ $1,500 3 1/4 1,070 $1.60/ $1,712 4 1/4 1,190 $1.70/ $2,023 In the above table, P* is the euro price of the asset held by the U.S. firm and P is the dollar price of the asset. a. Compute the exchange exposure faced by the U.S. firm (for each case). b. What is the variance of the dollar price of this asset if the U.S. firm remains unhedged against this exposure? c. If the U.S. firm hedges against this exposure using the forward contract, what is the variance of the dollar value of the hedged position

Please answer all parts as I'm only allowed 20 questions a month for my 20 bucks. And really need to make sure I'm doing this correctly