How to measure Economic exposure The exposure coefficient. b, is defined as follows b CovP, S) Var(s) Where Cov(P s) is the covariance between the dollar value of the asset and the exchange rate, and var(s) is the variance of the exchange rate McGraw-Hilylrwoin 12-5 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rightsMcGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 12-5 How to Measure Economic Exposure The exposure coefficient, b, is defined as follows: Var( ) Cov( , ) S P S b = Where Cov(P,S) is the covariance between the dollar value of the asset and the exchange rate, and Var(S) is the variance of the exchange rate