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Suppose a U.S. investor wishes to invest in a British firm currently selling for 30 per share. The investor has $6,000 to invest, and the
Suppose a U.S. investor wishes to invest in a British firm currently selling for 30 per share. The investor has $6,000 to invest, and the current exchange rate is $2 per . Consider three possible prices per share at 26, 31, and 36 after 1 year. Also, consider three possible exchange rates at $1.60 per ,$2 per , and $2.40 per after 1 year. 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. Note: Do not round intermediate calculations. Round your answers to 2 decimal places
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