Firm estimate of the standard deviation

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A U.S based MNC, the Bundy Company, will receive one million yen tomorrow for its exports to an importer in Japan. It wants to determine its maximum one day loss based on a 95% confidence interval. The firm’s estimate of the standard deviation of the daily percentage change in the yen during the previous 100 days is 1.1%. Given that the spot rate for the Yen is $0.012, find

(a) The value of the yen based on the maximum one day loss if the firm expects a 0.5% fall in its value.

(b) The potential dollar loss for the Bundy co. if the percentage variability in the daily movements of the yen is 1.3%.

(c) The potential dollar loss if the confidence interval is 90% and the percentage variability of the yen is unchanged at 1.1%

Reference no: EM131568891

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