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A US FI Wishes to Hedge a €10 000 000

question 26

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A US FI wishes to hedge a €10 000 000 loan using euro currency futures.Each euro futures contract is for €125 000, and the hedge ratio is 1.40.The loan is payable in one year in euros.How many currency contracts are necessary to hedge this asset?


Definitions:

National Science Foundation

A United States government agency that supports fundamental research and education in all non-medical fields of science and engineering.

Counseling Research

The systematic investigation into the processes and outcomes of counseling with the aim of increasing effectiveness and understanding of therapeutic practices.

Federal Grant

Financial assistance provided by the federal government to support a specific project, program, or activity.

MMPI-Depression Scale

A subscale of the Minnesota Multiphasic Personality Inventory designed to assess symptoms of depression in individuals.

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