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The dollar net cash flows of an MNC are generated from a portfolio of currencies. The exposure of the portfolio of currencies can be measured by the standard deviation of the portfolio, which indicates how the portfolio's value may deviate from what is expected. Consider an MNC that will receive payments in two foreign currencies: 75% in Euro and the reainder in Chinese Yuan. If the standard deviation of the monthly percentage changes in Euro is 21% and in Yuan is 21% and the correlation coefficient between the Euro and the Chinese Yuan is 0.4 calcualte the standard devistion of the portfolio Write the result below as decimal number (ie, write 0.035 not 3.5%)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92770775

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