Which of the following would effectively hedge Dell's dollar profit exposure? Sell 100 million in the forward market Buy 100 mittion in the forward market Sell 616.7 million in the forward market Sell 67.4mithlon in the forward market Suppose Dell is selling 50,000 units in Europe at an average price of 2,000 per unit. Its costs are $2,000 per unit. Now consider a 10% fall in the Euro from $1.20/ to $1.08/. Assume zero passthrough (i.e., Dell's sale prices in Euro remain the same at 2,000 per unit and sales volume remains to be 50,000 units). What is the delta for Dell's dollar profit? 0 10 6.0 5.57 Question 3 1 pts Suppose Dell is selling 50,000 units in Europe at an average price of 62,000 per unit. Its costs are $2,000 per unit. Now consider a 10% fall in the Euro from $1.20/ to $1.08/. Assume zero passthrough (t.e. Dell's sale prices in Euro remain the same at 2,000 per unit and sales volume remains to be 50,000 units). Which of the following would effectively hedge Dell's dollar profit exposure? Suppose that you hold a piece of land in the city of London that you may want to sell in one year. As a U.S, resident, you are concerned with the dollar value of the land. Assume that if the British economy booms in the future, the land will be worth 2,000, and one British pound will be worth $1.80/. If the British economy slows down, on the other hand, the land will be worth less, say, 1,500, but the pound will be stronger, say, $2.20/. You feel that the British economy will experience a boom with a 60 percent probability and a slowdown with a 40 percent probability. What is your estimated exposure (b) to the exchange risk by using the definition of exposure b=Cov(P,S)/Var(S) ? [Hint: you need to review some basic probability/statistics to make the calculations.] 539.17 8750 $445.23 f.750