1. Use the data from the file economic risk attached to answer the following:

a. How does a 1% change in the exchange rate for the Brazilian real affect the price of the stock?

b. Is the relationship between the changes in the value of the real and returns on the stock statistically significant? Explain how you determine this.

c. If an investor owning stock in the company were to hedge the real related risk of the stock perfectly, how much lower would the risk of the investment be? (That is, how much lower would the volatility of the stock be after hedging real related risk?)

d. When the value of the real increases, how does the stock price change?

If the value of the real increases, the stock price increases.

Date	Stock price	USD/BRL
6/29/18	0.20	3.9714
6/28/18	0.25	3.972
6/27/18	0.25	3.9706
6/26/18	0.25	3.9678
6/25/18	0.23	3.9643
6/22/18	0.31	3.9675
6/21/18	0.21	3.9767
6/20/18	0.22	3.9689
6/19/18	0.21	3.9723
6/18/18	0.21	3.9557
6/15/18	0.34	3.9661
6/14/18	0.30	3.9661
6/13/18	0.34	3.9631
6/12/18	0.34	3.9634
6/11/18	0.34	3.9567
6/8/18	0.30	3.9665
6/7/18	0.29	3.9656
6/6/18	0.29	3.9578
6/5/18	0.29	3.9635
6/4/18	0.30	3.9608
6/1/18	0.35	3.9659
5/31/18	0.40	3.9658
5/30/18	0.35	3.9758
5/29/18	0.35	3.9742
5/25/18	0.27	3.9708
5/24/18	0.29	3.9672
5/23/18	0.15	3.9757
5/22/18	0.15	3.9697
5/21/18	0.20	3.9626
5/18/18	0.20	3.9667
5/17/18	0.12	3.9834
5/16/18	0.14	3.9818
5/15/18	0.14	3.9792
5/14/18	0.14	3.9915
5/11/18	0.16	3.9744
5/10/18	0.20	3.9649
5/9/18	0.20	3.9859
5/8/18	0.21	3.9991
5/7/18	0.19	4.0067
5/4/18	0.22	3.989
5/3/18	0.16	3.9987
5/2/18	0.24	3.978
5/1/18	0.24	4.0045
4/30/18	0.24	4
4/27/18	0.21	4.0124
4/26/18	0.25	4.016
4/25/18	0.29	4.017
4/24/18	0.29	4.0182
4/23/18	0.21	4.0008
4/20/18	0.21	3.9961
4/19/18	0.32	4.0364
4/18/18	0.31	4.035
4/17/18	0.29	4.0179
4/16/18	0.29	3.9969
4/13/18	0.26	4.0107
4/12/18	0.30	4.0096
4/11/18	0.29	4.0026
4/10/18	0.20	3.9978
4/9/18	0.20	3.9961
4/6/18	0.22	3.9794
4/5/18	0.22	3.9594
4/4/18	0.24	3.9277
4/3/18	0.25	3.9198
4/2/18	0.25	3.9109
3/29/18	0.25	3.9073
3/28/18	0.23	3.9225
3/27/18	0.20	3.9373
3/26/18	0.20	3.909
3/23/18	0.30	3.8725
3/22/18	0.26	3.8597
3/21/18	0.26	3.8528
3/20/18	0.28	3.8525
3/19/18	0.29	3.8418
3/16/18	0.37	3.8168
3/15/18	0.35	3.8121
3/14/18	0.35	3.8205
3/13/18	0.26	3.8298
3/12/18	0.26	3.8278
3/9/18	0.30	3.8202
3/8/18	0.40	3.8308
3/7/18	0.42	3.8017
3/6/18	0.42	3.8009
3/5/18	0.40	3.7898
3/2/18	0.40	3.7927
3/1/18	0.40	3.7878
2/28/18	0.40	3.7799
2/27/18	0.40	3.7818
2/26/18	0.40	3.775
2/23/18	0.40	3.7797
2/22/18	0.42	3.7737
2/21/18	0.42	3.7579
2/20/18	0.42	3.7607
2/16/18	0.45	3.7689
2/15/18	0.47	3.7579
2/14/18	0.40	3.7545
2/13/18	0.35	3.7699
2/12/18	0.35	3.7656
2/9/18	0.30	3.7657
2/8/18	0.15	3.7625
2/7/18	0.35	3.7557
2/6/18	0.38	3.7433
2/5/18	0.37	3.7584
2/2/18	0.35	3.7702
2/1/18	0.36	3.7821
1/31/18	0.45	3.779
1/30/18	0.37	3.7757
1/29/18	0.32	3.7685
1/26/18	0.27	3.7697
1/25/18	0.37	3.7484
1/24/18	0.35	3.738
1/23/18	0.32	3.7332
1/22/18	0.35	3.7134
1/19/18	0.35	3.7036
1/18/18	0.35	3.6953
1/17/18	0.35	3.6915
1/16/18	0.33	3.7014
1/12/18	0.32	3.7043
1/11/18	0.30	3.6934
1/10/18	0.30	3.678
1/9/18	0.30	3.6897
1/8/18	0.31	3.6801
1/5/18	0.30	3.6823
1/4/18	0.44	3.6657
1/3/18	0.44	3.6793
1/2/18	0.44	3.6798
12/29/17	0.50	3.6845
12/28/17	0.46	3.6759
12/27/17	0.46	3.6945
12/26/17	0.45	3.6885
12/22/17	0.45	3.6849
12/21/17	0.45	3.6927
12/20/17	0.45	3.6955
12/19/17	0.45	3.6837
12/18/17	0.45	3.6701
12/15/17	0.45	3.6736
12/14/17	0.45	3.6627
12/13/17	0.44	3.6734
12/12/17	0.42	3.6732
12/11/17	0.45	3.6591
12/8/17	0.45	3.6606
12/7/17	0.50	3.658
12/6/17	0.45	3.6563
12/5/17	0.45	3.6501
12/4/17	0.45	3.6454
12/1/17	0.45	3.6317
11/30/17	0.46	3.6412
11/29/17	0.45	3.6456
11/28/17	0.48	3.6385
11/27/17	0.50	3.6212
11/24/17	0.50	3.6134
11/22/17	0.52	3.6128
11/21/17	0.52	3.612
11/20/17	0.59	3.6107
11/17/17	0.52	3.6177
11/16/17	0.51	3.6178
11/15/17	0.51	3.6232
11/14/17	0.45	3.6243
11/13/17	0.40	3.6241
11/10/17	0.40	3.614
11/9/17	0.40	3.6081
11/8/17	0.45	3.608
11/7/17	0.41	3.6164
11/6/17	0.38	3.6174
11/3/17	0.40	3.6221
11/2/17	0.45	3.6027
11/1/17	0.45	3.6135
10/31/17	0.52	3.6079
10/30/17	0.55	3.6139
10/27/17	0.52	3.6003
10/26/17	0.54	3.6128
10/25/17	0.57	3.6113
10/24/17	0.52	3.6076
10/23/17	0.52	3.6044
10/20/17	0.52	3.6035
10/19/17	0.54	3.6114
10/18/17	0.51	3.5946
10/17/17	0.55	3.6077
10/16/17	0.55	3.6119
10/13/17	0.50	3.5987
10/12/17	0.58	3.5777
10/11/17	0.60	3.5855
10/10/17	0.60	3.5967
10/9/17	0.59	3.5957
10/6/17	0.50	3.5923
10/5/17	0.65	3.5898
10/4/17	0.60	3.5882
10/3/17	0.60	3.582
10/2/17	0.62	3.6009
9/29/17	0.65	3.6051
9/28/17	0.65	3.6085
9/27/17	0.58	3.6043
9/26/17	0.65	3.5979
9/25/17	0.62	3.599
9/22/17	0.59	3.5972
9/21/17	0.50	3.6005
9/20/17	0.55	3.6093
9/19/17	0.55	3.5979
9/18/17	0.52	3.6041
9/15/17	0.59	3.5912
9/14/17	0.59	3.5863
9/13/17	0.55	3.5795
9/12/17	0.60	3.5842
9/11/17	0.60	3.5887
9/8/17	0.60	3.5845
9/7/17	0.50	3.5982
9/6/17	0.55	3.5975
9/5/17	0.61	3.5985
9/1/17	0.67	3.5983
8/31/17	0.68	3.5918
8/30/17	0.50	3.5763
8/29/17	0.60	3.5829
8/28/17	0.69	3.5795
8/25/17	0.65	3.5691
8/24/17	0.71	3.5749
8/23/17	0.66	3.5714
8/22/17	0.60	3.5589
8/21/17	0.60	3.5613
8/18/17	0.50	3.5592
8/17/17	0.50	3.5598
8/16/17	0.50	3.5519
8/15/17	0.50	3.5409
8/14/17	0.43	3.5591
8/11/17	0.50	3.5651
8/10/17	0.50	3.5548
8/9/17	0.48	3.5587
8/8/17	0.48	3.5527
8/7/17	0.39	3.5511
8/4/17	0.48	3.547
8/3/17	0.50	3.5321
8/2/17	0.50	3.5428
8/1/17	0.50	3.5391
7/31/17	0.50	3.5399
7/28/17	0.49	3.5245
7/27/17	0.41	3.531
7/26/17	0.50	3.5234
7/25/17	0.50	3.5362
7/24/17	0.50	3.5335
7/21/17	0.41	3.5232
7/20/17	0.41	3.5287
7/19/17	0.51	3.5337
7/18/17	0.60	3.529
7/17/17	0.60	3.5281
7/14/17	0.60	3.5368
7/13/17	0.60	3.5404
7/12/17	0.64	3.5373
7/11/17	0.60	3.54
7/10/17	0.60	3.5374
7/7/17	0.60	3.5458
7/6/17	0.60	3.5323
7/5/17	0.60	3.5273
7/3/17	0.65	3.5266