The Real Cost of Hedging Payables with a Forward Contract

The real cost of hedging payables with a forward contract equals:

A) the nominal cost of hedging minus the nominal cost of not hedging.
B) the nominal cost of not hedging minus the nominal cost of hedging.
C) the nominal cost of hedging divided by the nominal cost of not hedging.
D) the nominal cost of not hedging divided by the nominal cost of hedging.

Correct Answer:

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