Suppose it is October 1, 1996 and your firm finds that the finance department bought French francs when the firm accumulated excess funds previously. A recent favorable business climate generated additional excess cash flow, at least temporarily, and you want to make a decision about the French francs. If the current exchange rate, 5.75 francs/dollar, is exceedingly favorable (francs are cheap--lots of francs for each dollar), then you will buy more francs. If the exchange rate is exceedingly unfavorable, then you will divest the firm of its current franc balance. Suppose you consider "exceedingly favorable" conditions to exist if the current exchange rate is larger than the mean rate over the last three quarters (nine months). If neither of these situations exists, the firm will invest elsewhere.
 
Use your sample of 36 daily exchange rates from Worksheet 17 along with the statistics you computed to answer the following questions.

1.    Find a 95 confidence interval for the mean exchange rate over the three quarter
       period. Interpret your answer.

2.    Based on your answer to number one and the current exchange rate, should the
       firm purchase more francs? Should it dispose of its current holdings of francs?
       Should it invest in other ways. Explain.

3.    What risk does the company take if it follows your decision? Can you put a value
       on this risk

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