A Canadian Firm Holds an Asset in France and Faces

question 19

Multiple Choice

A Canadian firm holds an asset in France and faces the following scenario:
$\begin{array} { l l l l } \hline & \text { State 1 } & \text { State 2 } & \text { State 3 } \\\hline \text { Probability } & 20 \% & 50 \% & 30 \% \\\text { Spot rate } & \$ 1.6 / \text { euro } & \$ 1.65 / \text { euro } & \$ 1.70 / \text { euro } \\\begin{array} { l } \text { Price of the euro- } \\\text { asset }\end{array} & \text { euro } 2,000 & \text { euro } 3,000 & \text { euro 4,000 }\end{array}$
-The expected value of the investment in Canadian dollars is:

• A) $3,000.
• B) $4,950.
• C) $5,155.
• D) $5,550.

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Definitions:

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An archipelago off the northern coast of British Columbia, Canada, known for its rich indigenous Haida culture and biodiverse environments.