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Please write as clear as possible and complete all parts of the question thank you...

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Finance

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Please write as clear as possible and complete all parts of the question thank you image
(1)(a)What is exchange rate risk? Distinguish between Transaction Exposure and Economic exposure to exchange rate movements. (b)Consider the following information: 90-day U.S interest rate..... ......4% 90-day Malaysian interest rate...... ..3% 90-day forward rate for the Malaysian Ringgit ..$0.400 Spot Rate of Malaysian Ringgit .$0.404 Assume a U.S based MNC will need 300,000 Ringgit in 90 days and wishes to hedge this payable position. Would it be better off using a FORWARD hedge or MONEY MARKET hedge? (1)(a)What is exchange rate risk? Distinguish between Transaction Exposure and Economic exposure to exchange rate movements. (b)Consider the following information: 90-day U.S interest rate....... ..4% 90-day Malaysian interest rate....... .3% 90-day forward rate for the Malaysian Ringgit ......$0.400 Spot Rate of Malaysian Ringgit ...$0.404 Assume a U.S based MNC will need 300,000 Ringgit in 90 days and wishes to hedge this payable position. Would it be better off using a FORWARD hedge or MONEY MARKET hedge

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