CHAPTER 10 QUIZ 36
Interpreting Economic Exposure. Spratt Co. (a U.S. firm) attempts to determine its economic
exposure to movements in the British pound, by applying regression analysis to data over the last
36 quarters:
SP = b0 + b1e + u
where SP represents the percentage change in Alabama’s stock price per quarter, e represents the
percentage change in the pound value per quarter, and u is an error term. Based on the analysis,
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16 Sep 2015