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What is the benefit of hedging with forward contract

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Reference no: EM132844025

Suppose you need to pay V = 50,000 GBP in a year from now. Spot rate of GBP is 1.3. You do not have enough USD to purchase 50,000 GBP right now. Assume the forward premium = 0.03

Problem 1: What is the benefit of hedging with forward contract if the GBP spot rate in a year from now is 1.4?

Reference no: EM132844025

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