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The most important is the graphs Last year, your company sold electronic products to Brazil. You are expecting to receive Real 850,000 in 6 months.

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The most important is the graphs
Last year, your company sold electronic products to Brazil. You are expecting to receive Real 850,000 in 6 months. The following quotations are provided by a currency dealer: Draw the profit/loss graph for your unhedged position. If the spot rate in 6 months is $0.4000/Real, what would be your profit/loss for your unhedged position (based on the related forward rate quotation) Describe how you can hedge your currency risk. Draw the profit/loss graph for your long or short forward position. If the spot rate in 6 months is $0.4000/Real, what would be your profit/loss for your long or short forward position. Draw your graph for your combined position (unhedged plus long or short forward contract). What is your profit/loss for the combined position? If you are completely confident that the spot rate in 6 months will be 0.4228, do you need to take a short or long position in Real forward contract

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