Exam > University of Illinois, ChicagoFIN 494Final Exam prepared

3,4,6 10check 15Exchange rate is currently $0.7 US per 1 Canadian Dollar. Interest rate is 2% in the US and 1%in Canada. A bank is short a futures contract on 1,000,000 Canadian Dollars with F= $0.75 perunit, maturing in one year. What position should the bank take to hedge the currency risk?Delta is position size discounted by the foreign interest rate. It should be negative becausethe bank is sh ...[Show More]

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