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Question: Johanna International Mercantile Corporation has made a $15 million investment in a stamping mill located in northern Germany and fears a substantial decline in the euro's spot price from $1.21 to $1.15, lowering the value of the firm's capital investment. Johanna's principal U.S. bank advises the firm to use an appropriate option con-tract to help reduce Johanna's risk of loss. What currency option contract would you recommend? Explain why the contract you selected would help to reduce the firm's currency risk.

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