(08 marks) (Total marks 20) Question 06 i. Use the Marshall-Lerner condition, explain how a price-taking small economy can be successful in devaluation of its currency. (06 marks) ii. ABC company bought 1000 tins of canned fish worth of $10,000 on 1sJanuary 2019 and agreed to settle the import bill on 31 March 2019. The company sold 1000 tins of canned fish at Rs.1840 per unit and settled the import bill on due date. Exchange rate as at 1st January 2019: $1= Rs.180 Exchange rate as at 31" March 2019: $1= Rs.185 Forward contract rate: $1=Rs.182 Service charge of the forward contract: Rs. 1800 a. Calculate the profit or loss on this transaction as at 31" March 2019, if ABC company didn't enter into a forward contract agreement. 3 | Page Dean ables b. Calculate the profit or loss on the transaction as at 31" March 2019, if ABC company entered into a forward contract agreement. c. ABC company is considering to enter into forward contract agreement. Should they enter into the contract or not? Explain. (08 marks) iii. Explain the types of foreign currency transactions. Describe the importance of such different types. (03 marks) iv. Explain the difference between Nostro account and Vostro account. (03 marks) (Total marks 20)