Question: Answer 3 (3)A U.S based MNC, the Cody Company, will receive trmine its tomorrow for its exports to an importer in Mexico. It million Mexican

Answer 3

(3)A U.S based MNC, the Cody Company, will receive trmine its tomorrow for its exports to an importer in Mexico. It million Mexican Peso ten maximum one day loss based on a potential decline in the he peso. T The firm uses a 99% confidence interval in its estimation. The firm's estimate of the standard deviation of the daily percentage change in the peso durngistributed and days is 1.1%. Given that the d the spot rate for the peso is $0.09, find (a) The value of the peso based on the maximum one day loss if the firm expects the value of the peso to fall by 0.5%. (b) The potential dollar loss for the Cody co. movements of the peso is 1.3%. the previous 90 aily percentage changes are normally distributed and if the percentage variability in the daily (c) The potential dollar loss if the confidence interval is 95% and the percentage variability of the yen is unchanged at 1.1% (4) (a)Consider the following information: 180 day US interest rate..45% 180 day UK interest rate 5.0% 180 day forward rate for the pound.$1.47

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