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You own a U.S.-based firm that imports most of its materials from Sri Lanka. These materials are invoiced in Sri Lankan Rupees. You dont like

  1. You own a U.S.-based firm that imports most of its materials from Sri Lanka. These materials are invoiced in Sri Lankan Rupees. You dont like the uncertainty that shows up in your costs from month to month and there is no good derivatives market for Sri Lankan Rupees. You decide to renegotiate the contract with your supplier in Sri Lanka for the prices to be invoiced in dollars. Have you completely eliminated all exchange rate risk? Explain.

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