Which of the Following Conclusions Are Correct

question 39

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 0 ($)² and 0 ($)² respectively.
• B)None 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 0 ($)² and 0 ($)² respectively.
• C)Most of the volatility of the dollar value of the British asset can NOT 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.