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Question 1 (1p): Over the next 30 days, economists forecast that the pound may weaken relative...

Question 1 (1p):

Over the next 30 days, economists forecast that the pound may weaken relative to the dollar by as much as 7% or strengthen by as much as 6%.

Assume for simplicity that the possible outcomes for the rate of change in the GBPUSD spot rate are:

-7, -5,-3,-1, 0, 2, 5, and 6 percent

If these possibilities are equally likely, what are the mean and standard deviation of the future spot rate if the current rate is 1.312 dollars per pound?

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