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Your firm expects to pay (receive) 100 million Japanese yen in six months. One-year risk-free interest rate is 0.05% in Japan and 2% in the

Your firm expects to pay (receive) 100 million Japanese yen in six months.

One-year risk-free interest rate is 0.05% in Japan and 2% in the US.

Current spot rate is 105 JPY/USD.

Develop a money market hedging strategy to hedge the JPY payable (receivable) transaction exposure.

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