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extra credit - was initially $100 Since we have 100 units...

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Jon Franco IBUS 311 Extra Credit You would hedge the currency risk of the EWC shares by investing $10,000 into FXC shares. Since EWC shares fell from $40/share to $30/share, we can say that there was a $2,500 loss on the initial investment in EWC shares ($10,000 x 25% = $2,500). Since there is a decline in FXC units ($100/share $80/share), we short sell them for a gain of $20/share. We bought 100 shares in FXC because we had $10,000 to invest in it, and each share
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Unformatted text preview: was initially $100. Since we have 100 units in FXC, we report a $2,000 gain on short position. At the end of 2008, the investment portfolio would report an overall loss of $500. This is because of our $2500 loss in EWC shares combined with our $2,000 gain in short-selling the FXC shares....
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This note was uploaded on 03/12/2012 for the course ACCT 211 taught by Professor Kamlet during the Spring '08 term at Binghamton.

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