You are a U.S. investor who is considering investments in the Australian stock market, but you worry

Question:

You are a U.S. investor who is considering investments in the Australian stock market, but you worry about currency risk. You run a regression of the returns on the Australian stock index (in A$) on movements in the Australian dollar (U.S.$ per A$) and find a slope of -0.5.
a. What is your currency exposure if you invest in a diversified of Australian stocks?
b. You invest $10 million in the diversified but you fear that the Australian dollar will depreciate l0 percent relative to the U.S. dollar. How much do you expect to lose because of the currency movement? Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...