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A company to pay a certain amount of foreign currency in the future decides to hedge with futures contracts. Which of the following best describes

A company to pay a certain amount of foreign currency in the future decides to hedge with futures contracts. Which of the following best describes the advantage of hedging?

It leads to a better exchange rate being paid.

O It caps the exchange rate that will be paid.

It provides a floor for the exchange rate that will be paid.

It leads to a more predictable exchange rate being paid.

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