Based on the following information about the future possible exchange rates and the value of your foreign
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Question:
Based on the following information about the future possible exchange rates and the value of your foreign assets, you have computed Var(S)=0.00666667 and Cov(P,S)=12, so, b= 1,800. If you use the appropriate forward hedge, what will be the value of your hedged position in a situation when the future spot exchange rate is 1.4$/?
State Prob. P* S($/) P(=SP*)
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