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A Singapore company that exports machinery is expecting to receive $10 million in three months. The firm converts all its foreign currency receipts into euros.

A Singapore company that exports machinery is expecting to receive $10 million in three months. The firm converts all its foreign currency receipts into euros. The chief financial officer of the company wishes to lock in a minimum fixed rate for converting the $10 million to euro but also wants to keep the flexibility to use the future spot rate if it is favorable. Explain the hedging transaction that is most likely to achieve this objective

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