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3. Iberia would like to hedge its $100 million payable to Exxon, which is due in 120 days. Spot Rate = 1/$ Forward rate (120
3. Iberia would like to hedge its $100 million payable to Exxon, which is due in 120 days. Spot Rate = 1/$ Forward rate (120 days) = 0.95/$ Euro interest rate annualized = 7% Dollar interest rate annualized = 5%. Which hedging alternative would you recommend? Interest rates are the same for borrowing and lending
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