An Australian company has receivables of USD100,000, due in three months. The current spot AUD/ USD exchange rate is 1.7900/1.8000. The current three-month forward AUD/USD exchange rate is 1.7400/1.7500. The expected exchange rate is 1.7500/1.7600 in three months' time. Calculate the profit or loss you would expect to make on a forward hedge.
A) AUD1,000 loss
B) AUD1,000 profit
C) AUD2,000 profit
D) AUD2,000 loss
Correct Answer:
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