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 100 tons. Currently, spot price of potato is $.52 per kilogram. Also, assume that six-months forward contract with the price of $.50 per kilogram is available. At forward expiration in six month spot price of potato is $.65 per kilogram. 1What type of price-related risk FO is facing prior to deciding to hedge?AIncreasing pricesBDecreasing pricesCAbnormal prices

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