A Canadian exporting firm may use foreign exchange futures to hedge its exposure to exchange rate risk.
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A Canadian exporting firm may use foreign exchange futures to hedge its exposure to exchange rate risk. Its position in futures will depend in part on anticipated payments from its customers denominated in foreign currency. In general, however, should its position in futures be more or less than the number of contracts necessary to hedge these anticipated cash flows? What other considerations might enter into the hedging strategy?
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Related Book For
Investments
ISBN: 9781259271939
9th Canadian Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus, Lorne Switzer, Maureen Stapleton, Dana Boyko, Christine Panasian
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