2 Explain how the Sports Exports Company is exposed to exchange rate risk and how it could...
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2 Explain how the Sports Exports Company is exposed to exchange rate risk and how it could use the forward market to hedge this risk.
Each month, the Sports Exports Company (an Irish firm) receives an order for basketballs from a British sporting goods distributor. The monthly payment for the basketballs is denominated in British pounds, as requested by the British distributor. Jim Logan, owner of the Sports Exports Company, must convert the pounds received into euros.
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