Using of future contract on J Country yen to hedge its exchange rate risk and preference given to buying or selling of yen future and the quoted exchange rate actually matters. Exchange rate Exchange rate is used to define the value of one currency against the other currency. Exchange rate has two main components one is the currency used to compare that is domestic currency and other is the currency used to compare against that is the foreign currency.

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Chapter 25, Problem 12CQ

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To explain: Using of future contract on J Country yen to hedge its exchange rate risk and preference given to buying or selling of yen future and the quoted exchange rate actually matters.

Exchange rate

Exchange rate is used to define the value of one currency against the other currency. Exchange rate has two main components one is the currency used to compare that is domestic currency and other is the currency used to compare against that is the foreign currency.

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