Question: Identify the one true statement about currency forward contracts in the absence of bid - ask spreads: 3 Please turn over a . If you

Identify the one true statement about currency forward contracts in the absence of bid-ask spreads:
3
Please turn over
a. If you believe that the spot rate in 3 months will be larger than todays 3-month forward rate, you should then sell forward.
b. Extreme bind hedging, which is hedging the present value of all future FC cashflows, carries very little risk.
c. A combination of forward contracts with the same maturity and different inception allows us to speculate on the value of forward contracts.
d. The best way to hedge against FC cashflows is to simply avoid FC cashflows and invoice always in HC. There is no economic loss from doing this.
e. None of the suggested answers.

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