TABLE 17-2 the Following Payoff Matrix Is Given in Dollars

question 80

Multiple Choice

TABLE 17-2 The following payoff matrix is given in dollars.
$\quad$$\quad$$\quad$$\quad$$\quad$$\text {Action}$
$\begin{array} { c c c } \text { Event } & A & B \\\hline1 & 400 & 700 \\2 & 200 & 500\end{array}$
Suppose the probability of Event 1 is 0.5 and Event 2 is 0.5.
-Referring to Table 17-2, what is the coefficient of variation for Action A?

• A) 12.8%
• B) 133.33%
• C) 333.3%
• D) 33.3%

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Definitions:

Foreign Currency Option

A financial derivative that gives the holder the right, but not the obligation, to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.

Fair Value

The cost at which one could sell an asset or assume a liability in a structured exchange with market participants on the valuation date.