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Explain what is the cost of operation for the firm

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Reference no: EM132516152

a) Describe the mechanism of a money market hedge in which a firm wishes to eliminate the risk of devaluation of its functional currency at the time of receiving a future payment for a good sold to a company in a foreign currency.

b) Explain what is the cost of this operation for the firm.

c) Explain what is the main counterparty risk of this operation for the firm.

(please write enough to meet all marks)

Reference no: EM132516152

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