Problem $9\mathrm{.}2$ A U$.$S$.$ firm holds an asset in France and faces the following scenario: $$State $1$State $2$State $3$State $4$Probability$25\%25\%25\%25\%$Spot rate$ $1\mathrm{.}20$per euro$ $1\mathrm{.}10$per euro$ $1\mathrm{.}00$per euro$ $0\mathrm{.}90$per euroP$*1,5001,4001,3001,200$P$ $1,800$$ $1,540$$ $1,300$$ $1,080$ In the above table, P$*$ is the euro price of the asset held by the U$.$S$.$ firm and P is the dollar price of the asset. Required: Compute the exchange exposure faced by the U$.$S$.$ firm. What is the variance of the dollar price of this asset if the U$.$S$.$ firm remains unhedged against this exposure? If the U$.$S$.$ firm hedges against this exposure using a forward contract, what is the variance of the dollar value of the hedged position?