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Your company, headquartered in Ireland, is considering making a major FDI in Peru. This planned acquisition will be your company's first investment in Peru. Given the exchange rate systems of both countries, what type of exchange risk would this investment face? How would you recommend hedging this risk.

In the last part of question, try to include all possible methods such as financial derivatives (forwards, futures, options, swaps), money market hedge, internal hedge .etc and explain why (or why not) this method is appropriate in this case.

Please answer with references (links would be enough) , and give examples if applicable. Explanation in paragraphs.

Microeconomics, Economics

  • Category:- Microeconomics
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