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Problem: You work for a firm that exports cardboard from the US to Japan. Your firm will receive a payment of one million Japanese yen in six months. The current spot rate is 90 yen per dollar. The six month forward rate is 100 yen per dollar. You expect that in six months the spot rate will be 95 yen to the dollar. Given the rates and your expectations, will you advise your firm to lock in the forward rate or not? If your expectations are correct, how many dollars will your advice will save the firm? Explain your answers and provides examples.

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