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  3. 3. the international bank quotes the forward contr

3. The international bank quotes the forward contract rate as: $1.3/$1.35/. A. The is...

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3. The international bank quotes the forward contract rate as: $1.3/$1.35/. A. The is expected to depreciate substantially against $ in 30 days (below $1.3/ ). What is your hedging technique? Do you construct the forward contract to sell or buy . If so, which price do we use? (0.5) B. Suppose the spot exchange rate after 30 days is $1.4/ and you hedged against the exchange rate risk with the forward contract following your hedging technique in Q3-A. What is the opportunity cost? (0.5)

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