Suppose that you hold a piece of land in the city of London that you...
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Finance
Suppose that you hold a piece of land in the city of London that you may want to sell in one year. As a U.S. resident, you are concerned with the dollar value of the land. Now you are facing an uncertain outcome of the upcoming British negotiations for departure from the European Union. Assume that if the negotiation goes smoothly, in one year the land will be worth 20,000 and one British pound will be worth $1.65/. If the negotiation does not go well in one year the land will be worth 14,000 and the pound will be worth $1.35/. You feel that the smooth negotiation has a 55 percent probability and the bumpy negotiation has a 45 percent probability Which of the following would effectively hedge your exchange risk exposure? (Pick the closest number for your answer.) Sell 53,917 forward sell 46,948 forward Sell $34,523 forward Sell 43,150 forward
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