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Suppose the spot rate of the pound today is 170 and the

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1. Suppose the spot rate of the pound today is $1.70 and the three-month forward rate is $1.75.

a. How can a U.S. importer who has to pay 20,000 pounds in three months hedge her foreign- exchange risk?

b. What occurs if the U.S. importer does not hedge and the spot rate of the pound in three months is $1.80?

Reference no: EM13574784

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