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At what rate must the company hedge its exposure

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Question - A company has Net equity of $4 million and has decided its loss tolerance is no more than 10% of Net Equity. The same company has a $USD exposure, maturing in 180 days worth $5 million if converted to $AUD at the existing spot rate. If the current spot rate is AUD/USD 65 cents, at what rate must the company hedge its exposure if it is to comply with its own policy?

a. $11.08

b. 90.28 cents

c. 80 cents

d. 81.25 cents

Reference no: EM133028091

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