Question: A U S automobile importer is expecting a shipment of custom made
A U.S. automobile importer is expecting a shipment of custom-made cars from Britain in six months. Upon delivery, the importer will pay for the cars in pounds. Using the information in Table 23.2, suggest a hedging strategy for the importer. Explain the consequences for the spot market transaction and the forward market transaction if the $/£ spot exchange rate increases over the next six months.
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