Dollar cash flows associated with two foreign inflow currencies will normally be less volatile if the standard deviations of the individual currencies are lower.

Question

Quizplus · Accepted Answer

If the standard deviations of the individual currencies are lower, it means that the currencies are less volatile. This will result in less fluctuation of the dollar cash flows associated with those currencies. Therefore, dollar cash flows associated with two foreign inflow currencies will be less volatile if the standard deviations of the individual currencies are lower.

Dollar Cash Flows Associated with Two Foreign Inflow Currencies Will