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1. Tax Rationale for Hedging. A firm is projecting that because of currency variability is pretax income during the next two years will vary: Taxable

1. Tax Rationale for Hedging. A firm is projecting that because of currency variability is pretax income during the next two years will vary: Taxable incomes of USD 50,000 and USD 200,000 are expected during year 1 and year 2, respectively. Assume that the firm can eliminate this risk totally through hedging and that hedging produces taxable incomes of

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