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hello sir
i have a question when hedging the dollar receipt with futures, the answer does not calculate the profit by the difference between the buying and selling price
why do not need to do this
thank you
To be able to do that we would need to know either the spot rate or the futures price on the date of the transaction.
Here we do not have that information and therefore we calculate the lock-in rate, which calculates the net effect of converting at spot together with the gain or loss on the futures. I do explain the lock-in rate in my free lectures.
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