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Question text A non-life insurance company operating in Ghana bought reinsurance product from a foreign reinsurance company in USA. The cost of the reinsurance product
Question text A non-life insurance company operating in Ghana bought reinsurance product from a foreign reinsurance company in USA. The cost of the reinsurance product is US$5 million payable in 1 year time. The current exchange rate is US$0.18/GHS, and the 1 year forward rates between the British pound and the US$ is 0.625/US$, and between the British pound and the Ghana Cedi is 0.1587/GHS.Calculate the amount of GHS that the insurer will need to undertake the forward market hedge
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