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. Which of the following is the best futures position?

A. Sell (short) December BRL futures contracts.

B. Buy (long) October BRL futures contracts.

C. Sell (short) October BRL futures contracts.

D. Buy (long) December BRL futures contracts.

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