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Suppose the spot rate of the pound today is $1.70 and the three-month forward rate is $1.75. a. How can a U.S. importer who has
Suppose the spot rate of the pound today is $1.70 and the three-month forward rate is $1.75. a. How can a U.S. importer who has to pay 20,000 pounds in three months hedge his or her foreign-exchange risk? b. What occurs if the U.S. importer does not hedge and the spot rate of the pound in three months is $1.80?
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