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QUESTION 6 Assume ABC expects to receive 2 0 , 0 0 0 , 0 0 0 in 9 0 days. A dealer provides a

QUESTION 6
Assume ABC expects to receive 20,000,000 in 90 days. A dealer provides a quote of $0.875 for a currency forward contract to expire in 90 days. Suppose
that at the end of 90 days, the underlying currency's exchange rate is $0.90. Assume that settlement is in cash.
At expiration, what is ABC's payoff? [Hint: is this a Long, or a Short? Think about the actions by the long vs short in the context of foreign currencies. The long
pays... gets...; the short pays... gets....]
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