Question: Fichas de Oro Inc. ( FO ) is an Argentinian potato chip manufacturer. FO is a large scale manufacturer exporting its products to numerous counties
Fichas de Oro Inc. FO is an Argentinian potato chip manufacturer. FO is a large scale manufacturer exporting its products to numerous counties in Latin America. In order to assure seamless production decides to hedge its exposure to potato of tons. Currently, spot price of potato is $ per kilogram. Also, assume that sixmonths forward contract with the price of $ per kilogram is available. At forward expiration in six month spot price of potato is $ per kilogram. What type of pricerelated risk FO is facing prior to deciding to hedge?AIncreasing pricesBDecreasing pricesCAbnormal prices
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