What is underlying exposure

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You are the treasurer for ABC corporation. You just received a bill from your Italian supplier of Genoa salami for Eur1,00,000. The Euros are due in three months.

1. What is your underlying exposure? ( Are you long or short Euros? Do you have to do? you owe Euros)

2. If the EURUSD 3 month forward exchange rate is $1.15/EUR today. Tomorrow when you mark your books to market, what is the gain or loss on the underlying position if the EURUSD 3 month forward rate rises to $1.17/EUR?

Reference no: EM133084418

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