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Nick Andros of Streamline Company suggested that the company speculate in foreign currency as a partial hedge against its operations in the cattle market, which
Nick Andros of Streamline Company suggested that the company speculate in foreign currency as a partial hedge against its operations in the cattle market, which fluctuates like a commodity market. On October 1, 20X1, Streamline bought a 180-day forward contract to purchase 50,000,000 yen () at a forward rate of 1 = $0.0075 when the spot rate was $0.0070. Other exchange rates were as follows: Required: Did Streamline Company gain or lose on its purchase of the forward contract? Explain.
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