A US Firm Holds an Asset in Great Britain and Faces

question 1

Multiple Choice

A U.S. firm holds an asset in Great Britain and faces the following scenario: where,
P^* = Pound sterling 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:

• A)$5,050
• B)$3,700
• C)$2,112.50
• D)none of the above

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Definitions:

FTP

File Transfer Protocol, a standard network protocol used for the transfer of computer files between a client and server on a computer network.

Port 21

Typically used by the File Transfer Protocol (FTP) for control (command) messages, allowing the transfer of files between a client and a server over a network.

DNS Server

A server that translates human-friendly domain names into IP addresses, allowing browsers to load internet resources.

IP Address

Internet Protocol Address, a unique string of numbers and periods that identifies each computer communicating over a network.