A US Firm Holds an Asset in Israel and Faces the the Following

question 13

Multiple Choice

A U.S. firm holds an asset in Israel and faces the following scenario:
$\begin{array} { l l l l } \hline & \text { State 1 } & \text { State 2 } & \text { State 3 } \\\hline \text { Probability } & 25 \% & 50 ^ { \circ } \text { o } & 25 \% \\\text { Spot rate } & \$ 0.30 \text { ILS } & \text { \$0.20 ILS } & \$ 0.15 / \text { ILS } \\\text { P* } & \text { ILS2,000 } & \text { ILS5,000 } & \text { ILS3,000 } \\\text { P } & \$ 3,000 & \text { \$2.500 } & \text { \$750 }\end{array}$
where,
P* = Israeli new shekel (ILS) price of the asset held by the U.S. firm
P = dollar price of the same asset

-The expected value of the investment in U.S.dollars is: (Do not round intermediate calculations) :

• A) $2,083.33.
• B) $2,187.50.
• C) $6,250.00.
• D) $6,562.50.

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Definitions:

Inferential Statistics

Uses mathematical models, theories, and hypotheses to make predictions about a broader population based on observed sample data.

MANOVA

Multiple analysis of variance. This procedure is used when there are multiple dependent variables. See also ANOVA.

Multivariate Analysis

A statistical approach that examines the relationship between multiple variables in order to understand patterns and influences.

Statistical Significance

The probability that a computed statistic such as a t-test or correlation is not due to chance.