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1 Quta icream company has a subsidiary in Mexico. The subsidiary generates annual earnings of about 10 million pesos. Quta wants to protect against the
1 Quta icream company has a subsidiary in Mexico. The subsidiary generates annual earnings of about 10 million pesos. Quta wants to protect against the possibility that the peso will depreciate that leads to a lower reported earnings from the consolidated income statement. The best strategy for Quta to stabilize its reported earnings is: Purchasing a call option on pesos. Selling pesos forward in the foreign exchange market. Purchasing pesos forward in the foreign exchange market
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