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How could the investor have hedged his risk

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In 1990, a Japanese investor paid $100 million for an office building in downtown Los Angeles. At the time, the exchange rate was ¥145/$1. When the investor went to sell the building five years later, in early 1995, the exchange rate was ¥85/$1 and the building's value had collapsed to $50 million.

a. What exchange risk did the Japanese investor face at the time of his purchase?

b. How could the investor have hedged his risk?

Reference no: EM131145635

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