Multiple Choice
Gulf Air hedges a £2.5 million receivable by selling pounds forward. If the spot rate is £1 = $1.73 and the 90-day forward rate is $1.7158, what is Gulf Air's cost of hedging?
A) $142,000
B) $35,500
C) $8,875
D) it is unknown at the time Gulf Air enters into its hedge
Correct Answer:
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