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The sensitivity of realized domestic currency values of the firm's contractual cash flows denominated in foreign currency to unexpected changes in the exchange rate is
The sensitivity of "realized" domestic currency values of the firm's contractual cash flows denominated in foreign currency to unexpected changes in the exchange rate is transaction exposure. translation exposure. economic exposure. none of the above. Question 2 10 pts A Japanese EXPORTER has a 1,000,000 receivable due in one year, Spot and forward exchange rate data is given in the table: The one-year risk free rates are i=4.03%;=6.05%; and 4=1%. Detail a strategy using forward contracts that will hedge exchange rate risk. 116,504,854. Sell 1m forward using 16 contracts at the forward rate of $1.20 per 1. Buy 150,000,000 forward using 11.52 contracts, at the forward rate of $1.00=7120. Sell 1m forward using 16 contracts at the forward rate of $1.25 per 1. Buy 150,000,000 forward using 12 contracts, at the forward rate of $1.00=7120. None of the above
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