Thunder Corporation is an American firm that owns an asset in Norwich, England whose GBP price is random. The following table summarizes the three possible states of nature. The future GBP price of this Welsh asset (P) and the future spot foreign exchange rate (S) depends on the realized state of nature. Which of the following statements is most correct? State Probability P* Sxp* 1,000 $1.25/ $1,250 1/2 833 $1.50/ $1,250 714 $1.75/ $1,250 113 Multiple Choice Thunder faces no foreign exchange rate risk because the GBP price of the asset and the foreign exchange rate are perfectly negatively correlated. Hedging by Thunder is not possible since the states of nature are random. Thunder faces substantin Thunder faces substantial foreign exchange rate risk since the GBP price of the asset and the foreign exchange rate are positively correlated. Thunder's foreign exchange rate exposure can be completely hedged with derivatives written on the GBP