The UOG Exports Company receives US dollars each month as payment for the footballs that it exports.
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Question:
The UOG Exports Company receives US dollars each month as payment for the footballs that it exports. It
anticipates that the PKR will appreciate over time against the U.S. dollar.
(11) How can UOG Exports Company use currency futures contracts to hedge against exchange
rate risk? (2)
(12) The owner of the UOG Exports Company is concerned that the PKR may depreciate
substantially over the next month, but he also believes that the PKR could appreciate substantially
if specific situations occur. Should company use currency futures or currency options to hedge the
exchange rate risk?
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