Suppose You Own a Portfolio of British Securities Valued at About

question 93

Multiple Choice

Suppose you own a portfolio of British securities valued at about $500,000. The exchange rate is currently at $1 = £0.66. A currency contract on British pounds is set at 62,500 pounds. How many contracts must you purchase to protect at least 90% of your portfolio from exchange rate risk?

• A) 6
• B) 5
• C) 4
• D) 3

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Definitions:

Brittle Stars

Ophiuroidea, a large class of echinoderms that are characterized by their long, slender, and often highly flexible arms, which distinguish them from starfish.

Benthos

Bottom-dwelling sea organisms that fix themselves to one spot, burrow into the sediment, or simply walk about on the ocean floor.

Organisms Category

Classification of living entities into groups based on shared characteristics, such as species, genus, family, etc., to organize biological diversity.

Aquatic Biomes

Large regions of water in the environment, such as oceans, rivers, lakes, and wetlands, characterized by distinct ecological communities.