Mitigating euro/krona uncertainty
PROBLEM: The client is Swedish krona (Skr)-based and reports under IAS. He will receive a payment in euros in one year and will have to convert it into Skr, but is uncertain of its size and hence of how much to convert. He would like to hedge his exposure, but does not want to hedge 100% with a forward, because he could end up having to convert only 50% of the total amount. If Skr depreciates in the meantime, this would represent a loss. Meanwhile, the client is uncertain of the outcome of the
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