(Answered) Questiona us firm has a subsidiary in great britain and

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A U.S. firm has a subsidiary in Great Britain and faces the following scenario:

	Probability	Spot Rate	C^*	C	Proceeds from Fwd. contract	Dollar value of hedged position
State 1	40%	$2.50/£	£2,000
State 2	60%	$2.30/£	£2,500

a. Fill in the dollar value of the cash flow (C) in the table above.

b. Estimate your exposure to exchange rate risk (b).

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