Question: Kevin Nomura is a Japanese student who is planning a
Kevin Nomura is a Japanese student who is planning a one-year stay in the United States. He expects to arrive in the United States in eight months. He is worried about depreciation of the yen relative to the dollar over the next eight months and wishes to take a position in foreign exchange futures to hedge this risk. What should Mr. Nomura’s hedging position be? Assume the exchange rate between Japanese and U.S. currencies is quoted as yen/dollar.
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