Question: Consider AAAPI, the Nikkei ADR in disguise. To answer this question, use the information in Table 23.4. a. What is the volatility of Y ,

Consider AAAPI, the Nikkei ADR in disguise. To answer this question, use the information in Table 23.4.
a. What is the volatility of Y , the price of AAAPI?
b. What is the covariance between Y and x, the dollar-yen exchange rate?
c. What is the correlation between Y and x, the dollar-yen exchange rate?
d. Using this information on the volatility of Y and the correlation between Y and x, construct a joint binomial tree for x and Y . Use this tree to price a Nikkei quanto forward.

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