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27. A US company has land in London that will likely be sold in the next year. There are two possible states of the
27. A US company has land in London that will likely be sold in the next year. There are two possible states of the world. With a probability 80% the exchange rate will be $1.8571/. In this case the land will be worth 2,450,000. With a probability 20% the exhange rate will be $1.9314/and the land will be worth 2,341, 111. How would you use financial hedging to hedge this exposure? (a) Buy 380,525 forward (b) Buy 2,450,000 forward (c) Sell 2,341,111 forward (d) Sell 372,914 forward (e) None of the above.
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