Before revision:  Our rigorous characterization of risk corresponds to the dynamic counterpart of a mean-preserving spread. We explicitly solve for both stationary and transient exchange rate paths, and show how they are influenced by the distance to both the time horizon and the target zone bands.
After revision:  Our rigorous characterization of risk corresponds to the dynamic counterpart of a mean-preserving spreads in the fundamental distribution. We solve explicitly for stationary and non-stationary exchange rate paths, and show how they are influenced by the distance to both the time horizon and the target zone bands.