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Viscount Limited (a U.S. firm) is meeting with a Malaysian firm to which you will try to sell supplies. If you receive an order from

Viscount Limited (a U.S. firm) is meeting with a Malaysian firm to which you will try to sell

supplies. If you receive an order from that firm, you intend to obtain a forward contract to hedge

the future receivables in Malaysian ringgit. Currently, the forward rate of the ringgit and spot rate

are the same. You believe that interest rate parity holds. This afternoon, news occurs that makes

you believe that the U.S. interest rates will increase substantially by the end of this month, and that

the Malaysian interest rate will not change. However, your expectations of the spot rate of the

Malaysian ringgit are not affected at all in the future. How will your expected dollar amount of

receivables from the Malaysian transaction be affected (if at all) by the news that occurred this

afternoon? Explain.

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