Transaction exposure can be mitigated by taking forward, Financial Management

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Transaction exposure can be mitigated by taking forward

Transaction exposure can be mitigated by taking forward market positions (hedging). If you are a US importer of German textiles and have just ordered a one year supply at a cost of 20 million euros, Payment is due in one year. How can you protect (fix) the cash outflow in dollars should the forward rate be incorrect? Assume the forward rate on the euro is $1.15/Euro

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