Explain the meaning of the forward discount

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1. Explain the meaning of the forward discount of the $ relative to Euro. If the forward discount of the $ relative to Euro is 5%, does this mean that the forward premium of the Euro relative to the dollar is 5%? Why or why not?

2. Are some stocks less sensitive to market/systematic factors (recession, depression, war, etc.) than others? Be sure to provide some examples. How can the beta be used to assess the systematic risk associated with a stock? Also, is there a way that we can use the beta to create a portfolio that may have a minimal systematic risk? What do you think the expected returns would be if we minimized this risk?

Reference no: EM131953527

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