Degree of fluctuation against the dollar

Reference no: EM131015309

Probability Distribution of Financing Costs. Space Corporation, a U.S. corporation, decides to borrow Euro for one year. The interest rate on the borrowed euro is 6 percent. Space has developed the following probability distribution for the euro's degree of fluctuation against the dollar:

Possible Degree of Fluctuation of Euro Against the Dollar	Percentge Probability
-3%	15%
-2%	15%
1%	30%
4%	40%

Given this information, what is the expected value of the effective financing rate of the Euro from SpacesAc€?cs perspective? Show all work.

Reference no: EM131015309

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