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What is the optimal hedge for the firm

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Reference no: EM132907859

Problem - Now assume that you have determined that the historical standard deviation of the yen is about $.0005. Based on your assessment, you believe it is highly unlikely that the future spot rate will be more than two standard deviations above the expected spot rate by the delivery date. Also assume that the futures price remains at its current level of $.006912. Based on this expectation of the future spot rate, what is the optimal hedge for the firm?

Reference no: EM132907859

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