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International Economics 13th Edition by Robert Carbaugh
Edition 13ISBN: 978-1439038949International Economics 13th Edition by Robert Carbaugh
Edition 13ISBN: 978-1439038949 Exercise 10
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?
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?
Explanation
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A spot rate is a price to exchange one c...
International Economics 13th Edition by Robert Carbaugh
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