Your company is exporting product to Costa Rica. Your best guess is that, over the coming year, you will have sales equal to 450,000 Costa Rican colones (their currency). However, those sales will depend a lot on the results of the upcoming election in Costa Rica and could, in reality range from a value of 250,000 colones to 600,000 colones.

If you decide to enter a hedge for 450,000 colones, what are the additional risks from doing so? Are there ways to reduce that risk? At what cost?