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Currency Options Quotations 6. Multinational corporation B has borrowed DM to finance expansion of its German subsidiary. The German subsidiary sells 89 percent of its
Currency Options Quotations 6. Multinational corporation B has borrowed DM to finance expansion of its German subsidiary. The German subsidiary sells 89 percent of its products to an Italian customer who pays in lira. Company B is exposed to the depreciation of the lira and the appreciation of the DM. Design a hedging strategy for the parent. 7. Multinational corporation B has lira sales, but because of high interest rates on lira denominated funds, hedging with lira options could be less favorable than hedging with DM options. Which hedging strategy would you consider as the most feasible
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