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As the new treasurer of Pear Computer. Inc one of your main tasks is to manage the companys foreign exchange activities. The company has recently launched a new product in Europe and is expecting to generate significant revenues over the next 12 months pear computer already has other activities in Europe including manufacturing facilities where it has a significant number of employees etc.

Pear Computer is expecting to generate 10 million in revenues this year and due to its manufacturing activities in Europe. The company will also incur 8 million of expenses. There are no other revenues or expenses for pear computers in Europe.

1. What is Pear Computers net exposure to euros this year? And are they LONG or SHORT Euros

2. Pear computer's need to fund it operations In Japan at the end of the year and would like to use any surplus funds from Europe for this activity. Assume that today is January 1st and the company's year-end is December 31st. Using the following market rate what transactions would Pear computer execute in order to hedge its foreign exchange risk at the end of the year and calculate the expected amount of Yen that Pear computers Japanese operations Should receive at year-end (ignore transaction cost)

Spot	3- Month Forward	6- Month Forward	12 -Month Forward
C$1.2410- 30 /	C$1.2450- 80 /	C$1.2510- 30 /	1.2550- 80 /
110.20- 30 / C$	111.40- 50 / C$	111.70- 80 / C$	112.10- 20 / C$

1S S+S S-20 marks) the new Teasarer of Puar change activities The co Conyputer. Inc., one of your main tasks is to manage the company's foreign mty has recently launched a new product in Europe and is expecting to As senecare sieeficant revenues over the next 12 months. Pear Computer already has other activities in facilities where it has a significant number of employees, ete. Pear smsuter is expecting to generate 10 million in revenues this year and due to its manufacturing artivities in Euroyse, the company will also incur ES million of expenses. There are no other revenues or expenses fRr Pear Computer in Europe a) What is Pear Computer's net exposure to Euros this year? And are they LONG or SHORT Euros? Answer: LONG/SHORT (circle one) b) Pear Computer needs to fund its operations in Japan at the end of the year and would like to use any suplus funds from Europe for this activity. Assume that today is January 1t and the company's year-end is December 31 Using the following market rates, what transaction(s) would Pear Computer execute in order to hedge its foreign exchange risk at the end of the year and cakculate the expected amount of yen that Pear Computer's Japanese operations should receive at year-end (ignore transaction costs). 12-month forward Spot CS1.241O-30/ F110.20-30/CS 3-month forward CS1.2450-80/ VI11.40-507C 6-month forward CS1.2510-30/ 111.70-80 / CS CS1.2550-80/ 112, 10-20/CS 1S S+S S-20 marks) the new Teasarer of Puar change activities The co Conyputer. Inc., one of your main tasks is to manage the company's foreign mty has recently launched a new product in Europe and is expecting to As senecare sieeficant revenues over the next 12 months. Pear Computer already has other activities in facilities where it has a significant number of employees, ete. Pear smsuter is expecting to generate 10 million in revenues this year and due to its manufacturing artivities in Euroyse, the company will also incur ES million of expenses. There are no other revenues or expenses fRr Pear Computer in Europe a) What is Pear Computer's net exposure to Euros this year? And are they LONG or SHORT Euros? Answer: LONG/SHORT (circle one) b) Pear Computer needs to fund its operations in Japan at the end of the year and would like to use any suplus funds from Europe for this activity. Assume that today is January 1t and the company's year-end is December 31 Using the following market rates, what transaction(s) would Pear Computer execute in order to hedge its foreign exchange risk at the end of the year and cakculate the expected amount of yen that Pear Computer's Japanese operations should receive at year-end (ignore transaction costs). 12-month forward Spot CS1.241O-30/ F110.20-30/CS 3-month forward CS1.2450-80/ VI11.40-507C 6-month forward CS1.2510-30/ 111.70-80 / CS CS1.2550-80/ 112, 10-20/CS

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