The current exchange rate is $1.10/. The 1-year forward is $1.15/. The interest rate in...
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The current exchange rate is $1.10/. The 1-year forward is $1.15/. The interest rate in Europe is 2%. The interest rate in the USA is 5%.
Is this possible? What is the underlying concept of this question? Why might this company prefer to hedge this risk with options rather than forward contracts?
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You can see the logs in the Dashboard.