A Dutch investor holds a portfolio of Japanese stocks worth 160 million The current three month dollar euro forward exchange rate is $1 2 , and the current three month $ forward exchange rate is 160 $ Explain how the Dutch investor could hedge the exchange risk, using $ and $ forward contracts ...

The investor should sell 160 million forw ...

A Dutch investor holds a portfolio of Japanese stocks worth 160 million. The current three-month dollar/euro forward

Question:

A Dutch investor holds a of Japanese worth ¥160 million. The current three-month dollar/euro forward is $1.2/€, and the current three-month $:¥ forward is ¥160/$. Explain how the Dutch investor could hedge the €:¥ exchange risk, using $:¥ and €:$ forward contracts.
Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...