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A Japanese corporation exports goods to Australia and expects to receive payment in Australian dollars in three months. To mitigate the risk of a weakening
A Japanese corporation exports goods to Australia and expects to receive payment in Australian dollars in three months. To mitigate the risk of a weakening Australian dollar, the corporation can use a forward contract. What is the primary purpose of using a forward contract in this scenario? Minimizing credit risk Maximizing profit from favorable market trends = Hedging against exchange rate fluctuations
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