nd Help Sample questions (Hedging with derivatives) Draw an exposure diagram to illustrate a firm's exposure to interest rate riskifthe firm is going to borrow $10 million sixmonths from today.Assume the loan will be a one-year loan with al interestpaid at the end of the year. Graph the relation between the firm's interest costs and interest rates. Also graph the relation between the firms profit and interest rates assuning that hlgher Interest costs cannot be passed on to consumers. Draw an exposure diagram to illustrate the relationship between a firm's costs and the exchange rate between US dollars and British punds if the firms plans to purchase goods from a British firm one yearfrom today. Assume that the transactions is denominated in pounds, but the firm 1. 2. is concerned about its costs in dollars. Also draw an exposure diagram to illustrate the relation between a firm's profit and the exchange rate between US dollars and British pounds Draw an exposure diagram to illustrate the relationship between a gold mining firm's profit and the price of gold in three months 3