d) Why has there been a visible decline in the traded volume of Interest rate derivatives? Why is the decline a global trend?

b) You want to hedge a large exposure in Renminbi (RMB). Suppose both currency forwards and futures are available for RMB. (i) State the circumstances under which you may want to use forwards instead of futures. (3 marks) (ii) What key advantages do futures have over forward contracts ? ( 2 marks) c) An importer with 25 million payable in 90 days wants to hedge his exposure. He has the following information: - MYRE spot rate = RM3.95ie - MYR 60-day forward rate =RM3.89 - MYR 90-day forward rate = RM3.80 (i) Based on the above quotes, what is the market's expectation about the relative to the Malaysian Ringgit? (2 marks) (ii) State the hedge strategy using forwards with which the exporter can protect himself. (1 mark) b) You want to hedge a large exposure in Renminbi (RMB). Suppose both currency forwards and futures are available for RMB. (i) State the circumstances under which you may want to use forwards instead of futures. (3 marks) (ii) What key advantages do futures have over forward contracts ? ( 2 marks) c) An importer with 25 million payable in 90 days wants to hedge his exposure. He has the following information: - MYRE spot rate = RM3.95ie - MYR 60-day forward rate =RM3.89 - MYR 90-day forward rate = RM3.80 (i) Based on the above quotes, what is the market's expectation about the relative to the Malaysian Ringgit? (2 marks) (ii) State the hedge strategy using forwards with which the exporter can protect himself. (1 mark)