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International Finance - Oregon Co.'s

20. Forward Hedge. Would Oregon Co.'s real cost of hedging Australian dollar payables every 90 days have been positive, negative, or about zero on average over a period in which the dollar weakened consistently? What does this imply about the forward rate as an unbiased predictor of the future spot rate? Explain.

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ANSWER: The nominal cost when hedging Australian dollar payables would have been below the nominal cost of payables on an ...

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