The Current Spot Rate of the Hong Kong Dollar Against

question 50

Multiple Choice

The current spot rate of the Hong Kong dollar against the pound is S₀^£/HK$ = £0.10/HK$. The standard deviation of continuously compounded annual changes is estimated to be 10%. What price is two standard deviations below the current exchange rate?

• A) £0.0778/HK$
• B) £0.0800/HK$
• C) £0.0819/HK$
• D) £0.0900/HK$
• E) Cannot be determined from the information given

---

Definitions:

Population

The entire group of individuals or objects that is the subject of a statistical analysis.

Variables

Elements, features, or factors that are likely to change or vary in an experiment or dataset.

Scientific Method

A systematic, organized series of steps that helps ensure objectivity and consistency in exploring a social or scientific problem.

Research Process

The systematic steps followed to collect and analyze information to increase our understanding of a topic or issue.