A US firm wants to protect against a decline in profit as a result of a decline in the pound (GBP): The firm will suffer a loss at a rate of $20,000 if GBP value declines by $0.01 in 270 days. How can the firm hedge against GBP decline using a forward contract maturing in 270 days? How many GBP forward contracts does the firm need to hedge? One forward contract calls for a delivery of 62,500. 1. Hint 1: Determine the amount of GBP forward that will generate $20,000 loss for $0.01 decline in GBP value. 2. Hint 2: Determine the number of forward contracts for hedging.