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How do I approach this question? ABC Corporation, an Australian firm, decides to enter in a currency risk sharing agreement with its supplier, DEF Corporation.
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ABC Corporation, an Australian firm, decides to enter in a currency risk sharing agreement with its supplier, DEF Corporation. As part of the risk sharing arrangement, they set a base rate in USD/AUD of 0.809. There is a neutral zone that spans 0.663 to 0.922 (also in USD/AUD). Suppose the spot rate is 1.002. What is the realized contractual exchange rate at which ABC and DEF transact, assuming they split the risk equally? Select one: a. 0.8490 b. 0.7690 c. Not enough information O d. 0.809 e. 1.002Step by Step Solution
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