ESSENTIALS OF INVESTMENTS SELECT CHAPT
ESSENTIALS OF INVESTMENTS SELECT CHAPT
17th Edition
ISBN: 9781307126228
Author: Bodie
Publisher: MCG/CREATE
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Chapter 19, Problem 7PS

Now suppose the investor in Problem 3 also sells forward £ 5 , 000 at a forward exchange rate of $ 2 . 1 0 / £ .
a. Recalculate the dollar-denominated returns for each scenario.
b. What happens to the standard deviation of the dollar-denominated return?
Compare it to both its old value and the standard deviation of the pound-denominated return. LO 19 2

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