SlideShare a Scribd company logo
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. 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 a forward contract, what is the variance of the dollar value
of the hedged position?

More Related Content

More from abcchanbasha

CASO Construyendo una organizacin mgica en Johnson and Jo.pdf
CASO Construyendo una organizacin mgica en Johnson and Jo.pdfCASO Construyendo una organizacin mgica en Johnson and Jo.pdf
CASO Construyendo una organizacin mgica en Johnson and Jo.pdf
abcchanbasha
 
Con tristeza los cuatro estudiantes de la Universidad Carne.pdf
Con tristeza los cuatro estudiantes de la Universidad Carne.pdfCon tristeza los cuatro estudiantes de la Universidad Carne.pdf
Con tristeza los cuatro estudiantes de la Universidad Carne.pdf
abcchanbasha
 
Gestin de recursos humanos en Rusia el dilema de un estado.pdf
Gestin de recursos humanos en Rusia el dilema de un estado.pdfGestin de recursos humanos en Rusia el dilema de un estado.pdf
Gestin de recursos humanos en Rusia el dilema de un estado.pdf
abcchanbasha
 
1 Cul de las siguientes afirmaciones sobre los efectos da.pdf
1 Cul de las siguientes afirmaciones sobre los efectos da.pdf1 Cul de las siguientes afirmaciones sobre los efectos da.pdf
1 Cul de las siguientes afirmaciones sobre los efectos da.pdf
abcchanbasha
 

More from abcchanbasha (20)

CASO Construyendo una organizacin mgica en Johnson and Jo.pdf
CASO Construyendo una organizacin mgica en Johnson and Jo.pdfCASO Construyendo una organizacin mgica en Johnson and Jo.pdf
CASO Construyendo una organizacin mgica en Johnson and Jo.pdf
 
Con tristeza los cuatro estudiantes de la Universidad Carne.pdf
Con tristeza los cuatro estudiantes de la Universidad Carne.pdfCon tristeza los cuatro estudiantes de la Universidad Carne.pdf
Con tristeza los cuatro estudiantes de la Universidad Carne.pdf
 
Cmo ocurre la transformacin digital El caso de la tarje.pdf
Cmo ocurre la transformacin digital  El caso de la tarje.pdfCmo ocurre la transformacin digital  El caso de la tarje.pdf
Cmo ocurre la transformacin digital El caso de la tarje.pdf
 
Batten disease otherwise known as Neuronal Ceroid Lipofusci.pdf
Batten disease otherwise known as Neuronal Ceroid Lipofusci.pdfBatten disease otherwise known as Neuronal Ceroid Lipofusci.pdf
Batten disease otherwise known as Neuronal Ceroid Lipofusci.pdf
 
Globalisation is frequently hastened by removing regulatory .pdf
Globalisation is frequently hastened by removing regulatory .pdfGlobalisation is frequently hastened by removing regulatory .pdf
Globalisation is frequently hastened by removing regulatory .pdf
 
Gestin de recursos humanos en Rusia el dilema de un estado.pdf
Gestin de recursos humanos en Rusia el dilema de un estado.pdfGestin de recursos humanos en Rusia el dilema de un estado.pdf
Gestin de recursos humanos en Rusia el dilema de un estado.pdf
 
For each of the statements below please answer true or fals.pdf
For each of the statements below please answer true or fals.pdfFor each of the statements below please answer true or fals.pdf
For each of the statements below please answer true or fals.pdf
 
Find the zscores for which 50 of the distributions area l.pdf
Find the zscores for which 50 of the distributions area l.pdfFind the zscores for which 50 of the distributions area l.pdf
Find the zscores for which 50 of the distributions area l.pdf
 
5 Consider part of the STUDENT database where the enrollme.pdf
5 Consider part of the STUDENT database where the enrollme.pdf5 Consider part of the STUDENT database where the enrollme.pdf
5 Consider part of the STUDENT database where the enrollme.pdf
 
Consider a given itemset I1I2I4 The table below indicat.pdf
Consider a given itemset I1I2I4 The table below indicat.pdfConsider a given itemset I1I2I4 The table below indicat.pdf
Consider a given itemset I1I2I4 The table below indicat.pdf
 
A researcher is investigating the effect of background noise.pdf
A researcher is investigating the effect of background noise.pdfA researcher is investigating the effect of background noise.pdf
A researcher is investigating the effect of background noise.pdf
 
11 Requiron and excess reserves Suppose that Third fidelit.pdf
11 Requiron and excess reserves Suppose that Third fidelit.pdf11 Requiron and excess reserves Suppose that Third fidelit.pdf
11 Requiron and excess reserves Suppose that Third fidelit.pdf
 
begintabularllllll hline Metaboliccycle amp.pdf
begintabularllllll hline Metaboliccycle amp.pdfbegintabularllllll hline Metaboliccycle amp.pdf
begintabularllllll hline Metaboliccycle amp.pdf
 
1 For the following C statement please complete the corres.pdf
1 For the following C statement please complete the corres.pdf1 For the following C statement please complete the corres.pdf
1 For the following C statement please complete the corres.pdf
 
1 Insert the number of student N2 2 Insert the number .pdf
1 Insert the number of student N2 2 Insert the number .pdf1 Insert the number of student N2 2 Insert the number .pdf
1 Insert the number of student N2 2 Insert the number .pdf
 
1 Match each scientist listed below with their contribution.pdf
1 Match each scientist listed below with their contribution.pdf1 Match each scientist listed below with their contribution.pdf
1 Match each scientist listed below with their contribution.pdf
 
1 Vroom developed two decision trees to help managers decid.pdf
1 Vroom developed two decision trees to help managers decid.pdf1 Vroom developed two decision trees to help managers decid.pdf
1 Vroom developed two decision trees to help managers decid.pdf
 
1 Cul de las siguientes afirmaciones sobre los efectos da.pdf
1 Cul de las siguientes afirmaciones sobre los efectos da.pdf1 Cul de las siguientes afirmaciones sobre los efectos da.pdf
1 Cul de las siguientes afirmaciones sobre los efectos da.pdf
 
0 The average individual monthly spending in the United Sta.pdf
0 The average individual monthly spending in the United Sta.pdf0 The average individual monthly spending in the United Sta.pdf
0 The average individual monthly spending in the United Sta.pdf
 
La hiptesis del flujo de caja libre establece que O.pdf
    La hiptesis del flujo de caja libre establece que   O.pdf    La hiptesis del flujo de caja libre establece que   O.pdf
La hiptesis del flujo de caja libre establece que O.pdf
 

Recently uploaded

Recently uploaded (20)

Basic_QTL_Marker-assisted_Selection_Sourabh.ppt
Basic_QTL_Marker-assisted_Selection_Sourabh.pptBasic_QTL_Marker-assisted_Selection_Sourabh.ppt
Basic_QTL_Marker-assisted_Selection_Sourabh.ppt
 
Supporting (UKRI) OA monographs at Salford.pptx
Supporting (UKRI) OA monographs at Salford.pptxSupporting (UKRI) OA monographs at Salford.pptx
Supporting (UKRI) OA monographs at Salford.pptx
 
Phrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXX
Phrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXXPhrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXX
Phrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXX
 
The Art Pastor's Guide to Sabbath | Steve Thomason
The Art Pastor's Guide to Sabbath | Steve ThomasonThe Art Pastor's Guide to Sabbath | Steve Thomason
The Art Pastor's Guide to Sabbath | Steve Thomason
 
Template Jadual Bertugas Kelas (Boleh Edit)
Template Jadual Bertugas Kelas (Boleh Edit)Template Jadual Bertugas Kelas (Boleh Edit)
Template Jadual Bertugas Kelas (Boleh Edit)
 
Digital Tools and AI for Teaching Learning and Research
Digital Tools and AI for Teaching Learning and ResearchDigital Tools and AI for Teaching Learning and Research
Digital Tools and AI for Teaching Learning and Research
 
GIÁO ÁN DẠY THÊM (KẾ HOẠCH BÀI BUỔI 2) - TIẾNG ANH 8 GLOBAL SUCCESS (2 CỘT) N...
GIÁO ÁN DẠY THÊM (KẾ HOẠCH BÀI BUỔI 2) - TIẾNG ANH 8 GLOBAL SUCCESS (2 CỘT) N...GIÁO ÁN DẠY THÊM (KẾ HOẠCH BÀI BUỔI 2) - TIẾNG ANH 8 GLOBAL SUCCESS (2 CỘT) N...
GIÁO ÁN DẠY THÊM (KẾ HOẠCH BÀI BUỔI 2) - TIẾNG ANH 8 GLOBAL SUCCESS (2 CỘT) N...
 
Basic Civil Engineering Notes of Chapter-6, Topic- Ecosystem, Biodiversity G...
Basic Civil Engineering Notes of Chapter-6,  Topic- Ecosystem, Biodiversity G...Basic Civil Engineering Notes of Chapter-6,  Topic- Ecosystem, Biodiversity G...
Basic Civil Engineering Notes of Chapter-6, Topic- Ecosystem, Biodiversity G...
 
Unit 8 - Information and Communication Technology (Paper I).pdf
Unit 8 - Information and Communication Technology (Paper I).pdfUnit 8 - Information and Communication Technology (Paper I).pdf
Unit 8 - Information and Communication Technology (Paper I).pdf
 
How to Split Bills in the Odoo 17 POS Module
How to Split Bills in the Odoo 17 POS ModuleHow to Split Bills in the Odoo 17 POS Module
How to Split Bills in the Odoo 17 POS Module
 
Chapter 3 - Islamic Banking Products and Services.pptx
Chapter 3 - Islamic Banking Products and Services.pptxChapter 3 - Islamic Banking Products and Services.pptx
Chapter 3 - Islamic Banking Products and Services.pptx
 
UNIT – IV_PCI Complaints: Complaints and evaluation of complaints, Handling o...
UNIT – IV_PCI Complaints: Complaints and evaluation of complaints, Handling o...UNIT – IV_PCI Complaints: Complaints and evaluation of complaints, Handling o...
UNIT – IV_PCI Complaints: Complaints and evaluation of complaints, Handling o...
 
Solid waste management & Types of Basic civil Engineering notes by DJ Sir.pptx
Solid waste management & Types of Basic civil Engineering notes by DJ Sir.pptxSolid waste management & Types of Basic civil Engineering notes by DJ Sir.pptx
Solid waste management & Types of Basic civil Engineering notes by DJ Sir.pptx
 
Synthetic Fiber Construction in lab .pptx
Synthetic Fiber Construction in lab .pptxSynthetic Fiber Construction in lab .pptx
Synthetic Fiber Construction in lab .pptx
 
Introduction to Quality Improvement Essentials
Introduction to Quality Improvement EssentialsIntroduction to Quality Improvement Essentials
Introduction to Quality Improvement Essentials
 
How libraries can support authors with open access requirements for UKRI fund...
How libraries can support authors with open access requirements for UKRI fund...How libraries can support authors with open access requirements for UKRI fund...
How libraries can support authors with open access requirements for UKRI fund...
 
special B.ed 2nd year old paper_20240531.pdf
special B.ed 2nd year old paper_20240531.pdfspecial B.ed 2nd year old paper_20240531.pdf
special B.ed 2nd year old paper_20240531.pdf
 
Sectors of the Indian Economy - Class 10 Study Notes pdf
Sectors of the Indian Economy - Class 10 Study Notes pdfSectors of the Indian Economy - Class 10 Study Notes pdf
Sectors of the Indian Economy - Class 10 Study Notes pdf
 
MARUTI SUZUKI- A Successful Joint Venture in India.pptx
MARUTI SUZUKI- A Successful Joint Venture in India.pptxMARUTI SUZUKI- A Successful Joint Venture in India.pptx
MARUTI SUZUKI- A Successful Joint Venture in India.pptx
 
NLC-2024-Orientation-for-RO-SDO (1).pptx
NLC-2024-Orientation-for-RO-SDO (1).pptxNLC-2024-Orientation-for-RO-SDO (1).pptx
NLC-2024-Orientation-for-RO-SDO (1).pptx
 

In the above table P is the euro price of the asset held by.pdf

  • 1. 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. 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 a forward contract, what is the variance of the dollar value of the hedged position?