Question: Compute the exposure, the optimal forward hedge, and the value of the hedged firm in each state. The forward rate is usd/cad 0.80. State of

Compute the exposure, the optimal forward hedge, and the value of the hedged firm in each state. The forward rate is usd/cad 0.80.

State of the economyBoomMediumRecession ST-0.85:Joint probability 0.075 0.1 0.25 4.50 0.07 3.50 Valner (SI) 5.25 4.75 T-0.75Joint probabi lity 0250.175 .25 3.857 Valuer (USD)

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