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Over the next 30 days, economists forecast that the pound may weaken relative to the dollar by as much as 6%, or it may strengthen by as much as 7%. The possible values for the rate of change of the dollar-pound spot exchange rate are -7%, -5%, -3%, -1%, 0%, 2%, 4%, and 6%. Suppose that each of these values is equally likely to happen. What is the most likely value of the future spot exchange rate if the current rate is $1.5845/£?

Basic Finance, Finance

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