Suppose that the standard deviation of the return on Nestle, a Swiss firm, in terms of Swiss
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Suppose that the standard deviation of the return on Nestl´e, a Swiss firm, in terms of Swiss francs is 19% and the standard deviation of the rate of change in the dollar franc exchange rate is 15%. In addition, the estimated correlation between the Swiss franc return on Nestl´e and the rate of change in the exchange rate is 0.17. Given these figures, what is the standard deviation of the dollar rate of return on investing in Nestl´e stock?
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
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According to Equation 158 in the text we can write ...View the full answer
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