Question: Please explain the answer to the following question: Assume zero transaction costs. If the 90-day forward rate of the euro underestimates the spot rate 90

Please explain the answer to the following question:

Assume zero transaction costs. If the 90-day forward rate of the euro underestimates the spot rate 90 days from now, then the real cost of hedging payables will be:

A. Positive

B. Negative

C. Positive if the forward rate exhibits a premium, and negative if the forward rate exhibits a discount

d. Zero

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