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Suppose the dollar interest rate and the pound sterling

29/04/2021 Client: muhammad11 Deadline: 2 Day

Now suppose the investor in Problem 3 also sells forward £5,000 at a forward exchange rate of $2.10/£.
a. Recalculate the dollar-denominated returns for each scenario.
b. What happens to the standard deviation of the dollar-denominated return? Compare it to both its old value and the standard deviation of the pound-denominated return.

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