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    Exchange Rate Risk

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    Suppose you own a portfolio of British securities valued at $430,000. The exchange rate is currently at $1 = £0.57. A currency contract on British pounds is set at 62,500 pounds. How many contracts must you purchase to protect your portfolio from exchange rate risk?

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    Solution Preview

    Suppose you own a portfolio of British securities valued at $430,000. The exchange rate is currently at $1 = £0.57. A currency contract on British pounds is set at 62,500 pounds. How many contracts must you ...

    Solution Summary

    The number of contracts required to be purchased to protect a portfolio from exchange rate risk has been calculated.

    $2.19

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