Which of the Following Conclusions Are Correct

question 3

Multiple Choice

Which of the following conclusions are correct?

• A)Most of the volatility of the dollar value of the British asset can be removed by hedging exchange risk because b²[Var(S)] and Var(e) are 1,125,000 ($)² and 2,500 ($)² respectively.
• B)Most of the volatility of the dollar value of the British asset cannot be removed by hedging exchange risk because b²[Var(S)] and Var(e) are 236,717 ($)² and 493,751 ($)² respectively.
• C)Most of the volatility of the dollar value of the British asset cannot be removed by hedging exchange risk because b²[Var(S)] and Var(e) are 125,000 ($)² and -127,500 ($)² respectively.
• D)Most of the volatility of the dollar value of the British asset can be removed by hedging exchange risk because b²[Var(S)] and Var(e) are 125,000 ($)² and -127,500 ($)² respectively.

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