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You are short Euros 1 million in currency risk in your investments. The price of the foreign currency is Euro 1 = $1:40. You wish to hedge with futures. a. Do you go long or short in the the futures market? b. If the domestic interest rate is 4% and the foreign interest rate is 5%, what is the futures price on a one year contract. c. If I use options to reduce currency risk, do I use a put or call ? d. Do I go long or short?

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Financial Management, Finance

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