Effects of british pound appreciation on forward contract, Financial Management

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Effects of british pound appreciation on forward contract

Response to the following problem:

Sanibel Co. purchases British goods (denominated in pounds) every month. It negotiates a 1-month forward contract at the beginning of every month to hedge its payables. Assume the British pound appreciates consistently over the next 5 years. Will Sanibel be affected? Explain.

Make sure you use enough details to support your answer.

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Financial Management: Effects of british pound appreciation on forward contract

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