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.