State 1 = 30% State 2 = 50% State 3 = 30% Probability Spot Rate $2.30/Euro $2.00/ Euro $1.90/Euro p* 3,000 Euro 2,700 Euro 2500 Euro p $5,000 $6,000…

$4,000

A. Calculate the expected mean or value in $ of the Euro asset in 12 months.

B.Calculate the expected spot exchange rate in 12 months

C. Calculate the value of regression beta

D. Explain how one could implement the hedge.