Assuming zero transaction costs, the 180-day forward rate underestimates the spot rate 180 days from now, then the real cost of hedging payables with a forward contract will be negative.
In the context of market exchange, transaction costs are the expenses incurred. It is assumed that there are no barriers to bargaining if there are no transaction costs. The allocation cannot be a contractual equilibrium since any inefficient allocation results in unrealized contractual possibilities.
These expenses include the pricing research expenditures as well as the costs associated with creating and enforcing contracts. When deciding, all costs are taken into account in addition to market prices. Theoretically, transaction costs can be divided into four categories: bargaining costs, opportunity costs, search costs, and policing/enforcement costs.
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