Your firm is exposed to $20 million in foreign exchange rate risk through its deposit at a german bank and wants to use euro contracts to hedge.. Your firm is exposed to $20 million in foreign exchange rate risk through its deposit at a german bank and wants to use euro contracts to hedge. The CME offers euro contracts for 125,000 euros and the euro currently equals $1. What should your firm do to fully hedge this exchange rate risk?A: Buy 160 CME euro contractsB: Sell 160 CME euro contractsC: Buy 40 CME euro contractsD: Sell 40 CME euro contractsE: None of the above
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