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A Dutch investor holds a portfolio of Japanese stocks worth ¥160 million. The current three-month dollar/euro...

A Dutch investor holds a portfolio of Japanese stocks worth ¥160 million. The current three-month dollar/euro forward exchange rate is $1.2/:€, and the current threemonth $:¥ forward exchange rate is ¥160/$. Explain how the Dutch investor could hedge the €:¥ exchange risk, using $:¥ and €:$ forward contracts.

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