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Your firm is a U.K.-based exporter of British bicycles. You have sold an order to an American firm for $1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using forward contracts that will hedge your exchange rate risk.
A.
Go short 12 six-month forward contracts; pay £555,600.
B.
Go short 16 six-month forward contracts. Pay approximately £537,600
C.
Go long 12 six-month forward contracts. Receive approximately £549,500.
D.
Go long 16 six-month forward contracts; raise approximately £537,600