homework2 - 0:8 0:65 = 0:64: 0:81 It means that to hedge...

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3.6. h = 0 : 8 & 0 : 65 0 : 81 = 0 : 64 : It means that to hedge one unit of the asset, you need to use a futures position that corresponds to 0.64 units of the asset. 3.11. The short answer is that you should estimate how much revenue you would expect and then enter into forward or futures contracts to eliminate the yen/dollar exchange rate risk. The long answer is that you should look into how the exchange rate a±ects your competitiveness. For example, if your competitors are all Japanese exporters, then when the dollar depreciates, you might be able
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This note was uploaded on 03/19/2008 for the course FI 478 taught by Professor Yu during the Spring '08 term at Michigan State University.

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