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Consider a French exporter to receive 220,000 USD in 5 months. The purchase contract has just been signed while the average exchange rate of USD/EUR
Consider a French exporter to receive 220,000 USD in 5 months. The purchase contract has just been signed while the average exchange rate of USD/EUR is 0.9841. The rate average of the US money market is 2.10% and that of the euro zone is 1.75 %. This exporter wants to hedge against an unfavorable change in the exchange rate. Choose the correct answer(s): A. A fall in the EUR/USD would be favorable for the exporter. B. A rise in USD/EUR would be unfavorable for the exporter. O C. A rise in EUR/USD would be favorable for the exporter. D. A drop in the EUR/USD would be unfavorable for the exporter. E. A drop in USD/EUR would be favorable for the exporter. O F. A drop in the USD/EUR would be unfavorable for the exporter. G. A rise in EUR/USD would be unfavorable for the exporter. H. A rising USD/EUR would be favorable for the exporter.
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