11.2Â Â Â Your rich uncle in France has decided to give you an annuity of â‚¬2,000 per month. Because...

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11.2Â Â Â Your rich unclein France has decided to give you an annuity of â‚¬2,000 per month.Because you live in Canada, youâ€™re concerned about the effect offoreign currency fluctuations on your new income. You heard afinance guy on the radio talking about how â€œforeign currencyexchange rate could move against you, if youâ€™re not properlyprepared.â€Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
a.Â Â Â Â What does itmean for the currency exchange rate to move against you?
b.Â Â Â Â Would movingto France mitigate some of the risk? If so, how? If not, whynot?
c.Â Â Â Â Â Assumeyou want to stay in Canada. Your grandparents, who have retired toProvence (France), each receive a Canadian pension of C$1100monthly. What could you do to reduce the risk for all of you?

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a A currency exchange rate moving against you means that the exchange rate changes in a manner that decreases the cash flow you receive in your domestic currency For a person receiving payments in a foreign currency See Answer

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