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A businessman knows it will have to pay 3 million Euros in three months. The current exchange rate is 190Rupees per Euro .A Three-months forward
A businessman knows it will have to pay 3 million Euros in three months. The current exchange rate is 190Rupees per Euro .A Three-months forward contract on Euros is available at a forward price of Rs. 205 per Euro. Show with calculations the result of his hedging strategy with spot hedging and forward hedging in the following two cases.If three months later the spot price becomes Rs. 210 Per Euro.If three months later the spot price becomes Rs. 200 Per Euro.
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