You are a security analyst responsible for following Jaguar's stock after it floats. (Assume the company had 100 million shares outstanding.)
What is your estimate of Jaguar's stock price given a 10% drop in the real value of the dollar?
What is Jaguar's market value exposure (and delta) with respect to the real dollar/sterling exchange rate?
What is Jaguar's free cash flow exposure (and delta) for the years 1985 to 1989 with respect to the real dollar/sterling exchange rate?
Discuss the economic reasons for the size of this exposure.