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A USFirm Owes ¥10 Million 3 Months from Now

question 20

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A U.S.firm owes ¥10 million 3 months from now.The spot exchange rate is ¥95/$ and the forward rate is ¥96/$.Is the yen selling at a forward premium or discount,related to the dollar? Does the firm face exchange risk? Would you suggest that it buy now or later?


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