Problem
1. Suppose you are a US bicycle dealer. You have signed a contract in which you agree to import 1,000 bicycles from a UK manufacturer and to pay £100,000 for them 6 months from today. How exactly can you use the forward exchange market to protect yourself against exchange rate risk?
2. What is the essential difference between a hedger and a speculator in the foreign exchange market?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.