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as5 - subsidiary Thus if the foreign currency depreciates...

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2. UVA Company has periodic outflow payments in Thai baht that are substantially more than its Thai baht inflow payments. UVA could reduce its economic exposure by attempting to increase sales in Thailand, which would generate additional Thai baht inflows. 6. A firm can hedge translation exposure by selling forward the currency of the firm’s foreign
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Unformatted text preview: subsidiary. Thus, if the foreign currency depreciates, the translation loss will be somewhat offset by the gain on the short position created by the forward contract....
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