How can an importer who has to pay 10000 hedge the foreign risk?
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Then, the importer would have to pay $110,000, or $10,000 more, for the imports. ... Hedging refers to the avoidance of a foreign exchange risk, or the covering of an open posi ‐tion
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☑ Hedging is a way for a company to minimize or eliminate foreign exchange risk. Two common hedges are forward contracts and options. ... An option sets an exchange rate at which the company may choose to exchange currencies. If the current exchange rate is more favorable, then the company will not exercise this option.
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