6. Your firm is a U.K.-based exporter of bicycles. You have sold...
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Your firm is a U.K.-based exporter of bicycles. You have sold an order to a French firm for 1,000,000 worth of bicycles. Payment from the French firm (in euro) is due in 12 months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Have an estimate of how many contracts of what type and maturity. Multiple Choice none of the options Go short 100 12-month euro futures contracts; and short 80 12-month pound futures contracts. Go long 100 12-month euro futures contracts; and short 80 12-month pound futures contracts. Go long 100 12-month euro futures contracts; and long 80 12-month pound futures contracts. Go short 100 12-month euro futures contracts; and long 80 12-month pound futures contracts
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Your firm is a U.K.-based exporter of bicycles. You have sold an order to a French firm for 1,000,000 worth of bicycles. Payment from the French firm (in euro) is due in 12 months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Have an estimate of how many contracts of what type and maturity. Multiple Choice none of the options Go short 100 12-month euro futures contracts; and short 80 12-month pound futures contracts. Go long 100 12-month euro futures contracts; and short 80 12-month pound futures contracts. Go long 100 12-month euro futures contracts; and long 80 12-month pound futures contracts. Go short 100 12-month euro futures contracts; and long 80 12-month pound futures contracts
