BASED ON HOUSTON'S FORECAST FOR THE EUR RELATIVE TO THE USD AND A...

4. Based on Houston's forecast for the EUR relative to the USD and assuming

interest rate parity holds, should Austin most likely hedge the portfolio's EUR

exposure using forward contracts?

A. Yes.

B. No, because the euro is expected to depreciate by less than implied by the

forward contracts.

C. No, because the euro is expected to depreciate by more than implied by

the forward contracts.