Mitigated by taking forward market positions

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Reference no: EM131065203

Transaction exposure can be mitigated by taking forward market positions (hedging). If you are a US importer of German textiles and have just ordered a one year supply at a cost of 20 million euros, Payment is due in one year. How can you protect (fix) the cash outflow in dollars should the forward rate be incorrect? Assume the forward rate on the euro is $1.15/Euro

Reference no: EM131065203

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