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18 February, 00:19

A South Korean firm wants to hedge against unpredictable movements in foreign exchange rates which can make the global capital market riskier. What should the company do to achieve this?

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  1. 18 February, 03:09
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    the company should enter into a forward contract.

    Explanation:

    Based on the information provided within the question it can be said that the in order to achieve this the company should enter into a forward contract. This is a type of contract entered by two parties in which one is obligated to buy while the other is obligated to sell at a fixed price and at a future date regardless of changes in circumstances or economy. Therefore reducing the market risk that they buyer is exposed to.
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