18 Interpreting an unbiased forward rate. Assume that the forward rate is an unbiased but not necessarily
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18 Interpreting an unbiased forward rate. Assume that the forward rate is an unbiased but not necessarily accurate forecast of the future exchange rate of the yen over the next several years. Based on this information, do you think Raven Ltd should hedge its remittance of expected Japanese yen profits to the UK parent by selling yen forward contracts? Why would this strategy be advantageous? Under what conditions would this strategy backfire?
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