Question: I don't know how to solve this problem. May I get an assistance? Thank you! Washington Co. and Vermont Co. have no domestic business. They

I don't know how to solve this problem. May I get an assistance?

Thank you!

Washington Co. and Vermont Co. have no domestic business. They have a similar dollar equivalent amount of international exporting business. Washington Co. exports all of its products to Canada. Vermont Co. exports its products to Poland and Mexico, with about half of its business in each of these two countries. Each firm receives the currency of the country where it sends its exports. You obtain the end-of-month spot exchange rates of the currencies mentioned above during the end of each of the last 6 months.

Canadian Dollar:

  1. $0.8150
  2. 0.8203
  3. 0.8438
  4. 0.8590
  5. 0.8555
  6. 0.8603

Mexican Peso:

  1. $0.09347
  2. 0.09437
  3. 0.09225
  4. 0.09271
  5. 0.09267
  6. 0.09463

Polish Zloty:

  1. $0.29910
  2. 0.29829
  3. 0.30174
  4. 0.20851
  5. 0.30286
  6. 0.30340

You want to assess the data in a logical manner to determine which firm has a higher degree of exchange rate risk. Complete the table below and make your conclusion. (Hint: The percentage change in the portfolio of currencies is a weighted average of the percentage change in each currency in the portfolio.) Do not round intermediate calculations. Round your answers for standard deviation to four decimal places and for maximum expected loss to two decimal places.

Standard Deviation:

Canadian $: _________

Mexican peso: ___________

Polish Zloty: _____________

Portfolio: ______________

Maximum expected loss = 1.65 x Std. Dev.

Canadian $ _________%

Mexican Peso ________%

Polish Zloty __________%

Portfolio ____________%

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