Question: Firm B (U.S. based) needs to make an interest payment of BRL 1,750,000 in November. The spot exchange rate is USD/BRL 5.1419. Suppose the firm

Firm B (U.S. based) needs to make an interest payment of BRL 1,750,000 in November. The spot exchange rate is USD/BRL 5.1419. Suppose the firm wants to hedge the exchange rate risk with futures contracts. The futures contract size is BRL 100,000. How many futures contracts should the firm use to hedge the risk?

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