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Dell is selling 30,000 units in Europe at an average price of 1,500 per unit. Both the spot and forward exchange rates are $1.20/. The
Dell is selling 30,000 units in Europe at an average price of 1,500 per unit. Both the spot and forward exchange rates are $1.20/. The cost of each unit in dollars is $1,300 per unit. The elasticity of demand for Dell computers in Europe is = 1.5.
Which of the following would be an effective hedging when passthrough = 0.8?
buy $45 million forward | ||
sell 45 million forward | ||
buy 24.75 million forward | ||
buy put options on with total contract size close to 24.75 million |
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