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Baileys Corp. uses a forward hedge to hedge its Swiss Franc (CHF) payables. For the next month, its net exposure to the CHF is CHF100,000.

Baileys Corp. uses a forward hedge to hedge its Swiss Franc (CHF) payables. For the next month, its net exposure to the CHF is CHF100,000. The 30-day forward rate is $.80. 1-month later, the $/CHF exchange rate is CHF $.79. What is the real cost of hedging to Baileys?

$1,000

-$1,000

$79,000

$80,000

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