Volusia, Plc Is a UK-Based Exporting Firm That Expects to Receive

question 1

Multiple Choice

Volusia, plc is a UK-based exporting firm that expects to receive payments denominated in both euros and Canadian dollars in one month. Based on today's spot rates, the pound value of the funds to be received is estimated at £500,000 for the euros and £300,000 for the Canadian dollars. Based on data for the last fifty months, Volusia estimates the standard deviation of monthly percentage changes to be 8 percent for the euro and 3 percent for the Canadian dollar. The correlation coefficient between the euro and the Canadian dollar is 0.30. What is the portfolio standard deviation?

• A) 3.00%
• B) 5.44%
• C) 17.98%
• D) None of the above

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Definitions:

Hormonal Implant

A small rod implanted under the skin that releases hormones to prevent pregnancy.

Birth Control

Methods or devices used to prevent pregnancy as part of family planning.

Life Expectancies

The average period that an individual is expected to live, based on statistical averages of age, gender, and other demographic factors.

Birth Rates

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