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Ram Sharma • 193.86K Points
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Q. Assume a UK firm uses a forward contract to hedge all of its translation exposure. Also assume that the firm underestimated what its foreign earnings would be. Assume that the foreign currency depreciated over the year. The firm would generate a translation _______, which would be _______ than the gain generated by the forward contract.

(A) loss; smaller
(B) gain; larger
(C) loss; larger
(D) gain; smaller
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