The following information showed: State of the Economy Probability of the States % of Returns Strong Economic Growth 20% 13% Moderate Economic Growth 55% 10% Economic Recession 25% 5% What is the standard deviation? a.2.76% b.4.68% c.5.52% d.8.00%

The following information showed: State of the Economy Probability of the States % of Returns Strong Economic Growth 20% 13% Moderate Economic Growth 55% 10% Economic Recession 25% 5% What is the standard deviation? a.2.76% b.4.68% c.5.52% d.8.00%

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter9: Forecasting Exchange Rates

Section: Chapter Questions

Problem 19QA

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Concept explainers

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.

Question

The following information showed:

State of the Economy Probability of the States % of Returns
Strong Economic Growth 20% 13%
Moderate Economic Growth 55% 10%
Economic Recession 25% 5%

What is the standard deviation?
a.2.76%
b.4.68%
c.5.52%
d.8.00%

Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

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