Question: Im not sure how this is wrong! Help!! Suppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon
Im not sure how this is wrong! Help!!
Suppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon Valley. As a British resident, you are concerned with the pound value of your U.S. equity position. Assume that if the American economy booms in the future, your equity stake will be worth $1,000,860, and the exchange rate will be $1.4/. If the American economy experiences a recession, on the other hand, your American equity stake will be worth $500,960, and the exchange rate will be $1.6/. You assess that the American economy will experience a boom with a 50 percent probability and a recession with a 50 percent probability. a. Estimate your exposure to the exchange risk. (Do not round intermediate calculations.) X Answer is complete but not entirely correct. Exposure $ 4,500,160 X b. Compute the variance of the pound value of your American equity position that is attributable to the exchange rate uncertainty. (Do not round intermediate calculations.) X Answer is complete but not entirely correct. Variance 40,360,810,000 Suppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon Valley. As a British resident, you are concerned with the pound value of your U.S. equity position. Assume that if the American economy booms in the future, your equity stake will be worth $1,000,860, and the exchange rate will be $1.4/. If the American economy experiences a recession, on the other hand, your American equity stake will be worth $500,960, and the exchange rate will be $1.6/. You assess that the American economy will experience a boom with a 50 percent probability and a recession with a 50 percent probability. a. Estimate your exposure to the exchange risk. (Do not round intermediate calculations.) X Answer is complete but not entirely correct. Exposure $ 4,500,160 X b. Compute the variance of the pound value of your American equity position that is attributable to the exchange rate uncertainty. (Do not round intermediate calculations.) X Answer is complete but not entirely correct. Variance 40,360,810,000
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