Binding, lateral diffusion and exchange are fundamental dynamic processes involved in protein association with cellular membranes. In this study, we developed numerical simulations of lateral diffusion and exchange of fluorophores in membranes with arbitrary bleach geometry and exchange of the membrane localized fluorophore with the cytosol during Fluorescence Recovery after Photobleaching (FRAP) experiments. The model simulations were used to design FRAP experiments with varying bleach region sizes on plasma-membrane localized wild type GFP-Ras2 with a dual lipid anchor and mutant GFP-Ras2C318S with a single lipid anchor in live yeast cells to investigate diffusional mobility and the presence of any exchange processes operating in the time scale of our experiments. Model parameters estimated using data from FRAP experiments with a 1 micron x 1 micron bleach region-of-interest (ROI) and a 0.5 micron x 0.5 micron bleach ROI showed that GFP-Ras2, single or dual lipid modified, diffuses as single species with no evidence of exchange with a cytoplasmic pool. This is the first report of Ras2 mobility in yeast plasma membrane. The methods developed in this study are generally applicable for studying diffusion and exchange of membrane associated fluorophores using FRAP on commercial confocal laser scanning microscopes. ; Comment: Accepted for publication in Physical Biology (2010). 28 pages, 7 figures, 3 tables