Calculation and precisely define forward hedge

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Reference no: EM131558862

Roberto has just sold a large shipment of goods from an Italian firm for 1,000,000 euros (euro) receivable in six months. The current rate of exchange is USD 1.2342/euro and the six- month forward rate is USD 1.2508/euro. How much would Roberto receive if he used a forward hedge? Explain your calculation and precisely define a forward hedge. Why are forward hedges utilized? What risks do they help mitigate?

Reference no: EM131558862

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