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

question 96

Multiple Choice

A U.S. firm holds an asset in Israel and faces the following scenario: where,
P^* = Israeli shekel (IS) price of the asset held by the U.S. firm
P = Dollar price of the same asset
-The variance of the exchange rate is:

• A)0.001968
• B)0.002969
• C)0.003968
• D)0.004968

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing ownership interest in the company.

Brokerage Fee

A brokerage fee is a charge that a broker charges for the facilitation of transactions or services such as buying or selling stocks, real estate deals, or other financial services.

Dividend Per Share

The amount of dividend that a company pays out to each shareholder per share.

Trading Securities

Financial assets such as stocks and bonds held by an investor with the intent of selling them in the short term to profit from price fluctuations.