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Hedging With Derivatives and Money Market Hedge
Hedging With Derivatives and Money Market Hedge
Now that were familiar with options, lets look at using forward rates, futures rates and call and put options to hedge a long (Account Receivable or Note Receivable) or short (Account Payable or Note Payable) position in a currency. First, lets assume that we sold merchandise to a British firm for 1 million pounds payable in 6 months.
Spot Rate
Forward/Future
Spot Rate
Forward/Future