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Shipment date: 15th June, 2022 Invoice value: USD500,000 Payment terms: 90 days Spot rate (15th June, 2022): 1 USD: CAD 1.3171 Forward rate (90 days-Scotia
Shipment date: 15th June, 2022 Invoice value: USD500,000 Payment terms: 90 days Spot rate (15th June, 2022): 1 USD: CAD 1.3171 Forward rate (90 days-Scotia Bank): 1 USD: 1.3083 Upfront Scotia Forward Premium: CAD2,500 Spot rate (15th September, 2022): 1 USD: CAD 1.3012 (A) How can a company resorts to hedging and safeguard its international payment under the above circumstances? (B) As on shipment date, what will be the cost of hedging under the above circumstances? (C) What will be the financial risk and loss if hedging or forward contract has not been signed in with Scotia Financial Corporation
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