Assume that General Motors is planning to acquire an automobile company in Japan. The deal will probably be consummated within a year provided that approval is granted by the proper regulatory authorities in Japan and the United States. The two automakers have agreed upon the terms of the deal. GM will pay ¥100 billion once the deal is consummated. Discuss the advantages and disadvantage of hedging the currency risk in this deal with forwards, options, and swaps.

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