A U.S. firm holds an asset in Great Britain and faces the following scenario: where,
P * = Pound sterling price of the asset held by the U.S. firm
P = Dollar price of the same asset
-The expected value of the investment in U.S. dollars is:

Question

A U.S. firm holds an asset in Great Britain and faces the following scenario:  where,
P * = Pound sterling price of the asset held by the U.S. firm
P = Dollar price of the same asset
-The expected value of the investment in U.S. dollars is:

Quizplus · Accepted Answer

The expected value is calculated by multiplying each possible outcome by its probability and summing the results. Assuming the problem provides the necessary probabilities and outcomes, $5,050 is the correct expected value based on the given data.

A US Firm Holds an Asset in Great Britain and Faces