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Question
A U.S. bank has made 50 million in Britain and has 40 in deposits. The bank's currency trading desk has also contracted to buy 20 million and has short positions of 15 million. What is the bank's net exposure? How could they use forward contracts to hedge the exposure? If the bank has exposures in euros and yen, would you recommend they use the forward hedge? Why or why not?
Answer
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Related questions
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