The answer needs to be filled in the answer sheet with tables

Table 1: Calculation of 3 month forward rates using the simple interest rate parity principle (4 marks) Exchange rate Workings (Use of 6th decimal rounding in workings) Forward rate 3 months from now (provide answer with Sth decimal rounding in this column) AUDS/S Table 2: Discounts/Premium of US$ (6 marks) Exchange rate % Discount/Premium (Show calculations with answer). Answer must be rounded to 2 decimals. (1 mark each) State State whether whether positive or positive or negative for negative for imports exports (1 mark each) (1 mark each) AUDS/S Table 3: Australia import cost with money market hedge: (8 marks) PV of foreign currency to be invested Converted at spot to $ and to be borrowed $ amount to be repaid after period Exchange rate locked in with transaction Show answers in this row: Show your workings in the columns below the answers (Use 7 decimal INSTRUCTIONS: READ THE QUESTIONS CAREFULLY. ANSWER THE QUESTIONS ON THE SEPARATE ANSWER SHEET THAT CAN BE DOWNLOADED You are the manager of a U.S. company situated in Los Angeles and manages the import/export division of the company. The company distributes (resells) a variety of consumer products imported to the U.S.A from Australia and also exports goods manufactured in the U.S.A. to Britain. Therefore, your company is very much dependent on the impact of current and future exchange rates on the performance of the company. Scenario 1: You have to estimate the expected exchange rates between your home currency and the other currencies of the major other countries that you deal with in terms of both imports and exports. The reason is that increases in the values of other currencies compared to the U.S. Dollar may impact your imports negatively, whilst it may on the other hand, be good for exports. To do this estimate, you obtain the following spot exchange rate information: E/$ AUDS/S 10.76918 11.38140 You also obtain the following annual risk free rates applying in the countries: U.S.A. Britain Australia 2.660% 0.77896 1.95396 Your focus is presently to estimate the 3 month forward rates in order to consider the impact that it will have on the import and export sales of the company. Calculate the forward rates of the $ in terms of all the currencies by using simple interest rate parity e.g. 10% annual interest rate - 10/2 5% for six months. Do not effective annual interest rate compounding. Show all your workings in table 1 on the separate answer sheet by using the correct formula provided in your formula sheet. Provide an indication about what will happen to the value of the US$ based on the forward exchange rate calculations by calculating the expected discount/premium of it for each of the currencies in Table 2 on the separate answer sheet. Also show whether the impact will be positive (P) or negative (N) for imports and exports. For example: % Discount/Premium Import Export Exchange rate E/S Workings by you ............ Positive Negative = 1.93% premium Scenario 2: Considering the calculations you have done so far, you need to attend to a number of import and export transactions for goods that companies in the United States expressed interest in. Table 1: Calculation of 3 month forward rates using the simple interest rate parity principle (4 marks) Exchange rate Workings (Use of 6th decimal rounding in workings) Forward rate 3 months from now (provide answer with Sth decimal rounding in this column) AUDS/S Table 2: Discounts/Premium of US$ (6 marks) Exchange rate % Discount/Premium (Show calculations with answer). Answer must be rounded to 2 decimals. (1 mark each) State State whether whether positive or positive or negative for negative for imports exports (1 mark each) (1 mark each) AUDS/S Table 3: Australia import cost with money market hedge: (8 marks) PV of foreign currency to be invested Converted at spot to $ and to be borrowed $ amount to be repaid after period Exchange rate locked in with transaction Show answers in this row: Show your workings in the columns below the answers (Use 7 decimal INSTRUCTIONS: READ THE QUESTIONS CAREFULLY. ANSWER THE QUESTIONS ON THE SEPARATE ANSWER SHEET THAT CAN BE DOWNLOADED You are the manager of a U.S. company situated in Los Angeles and manages the import/export division of the company. The company distributes (resells) a variety of consumer products imported to the U.S.A from Australia and also exports goods manufactured in the U.S.A. to Britain. Therefore, your company is very much dependent on the impact of current and future exchange rates on the performance of the company. Scenario 1: You have to estimate the expected exchange rates between your home currency and the other currencies of the major other countries that you deal with in terms of both imports and exports. The reason is that increases in the values of other currencies compared to the U.S. Dollar may impact your imports negatively, whilst it may on the other hand, be good for exports. To do this estimate, you obtain the following spot exchange rate information: E/$ AUDS/S 10.76918 11.38140 You also obtain the following annual risk free rates applying in the countries: U.S.A. Britain Australia 2.660% 0.77896 1.95396 Your focus is presently to estimate the 3 month forward rates in order to consider the impact that it will have on the import and export sales of the company. Calculate the forward rates of the $ in terms of all the currencies by using simple interest rate parity e.g. 10% annual interest rate - 10/2 5% for six months. Do not effective annual interest rate compounding. Show all your workings in table 1 on the separate answer sheet by using the correct formula provided in your formula sheet. Provide an indication about what will happen to the value of the US$ based on the forward exchange rate calculations by calculating the expected discount/premium of it for each of the currencies in Table 2 on the separate answer sheet. Also show whether the impact will be positive (P) or negative (N) for imports and exports. For example: % Discount/Premium Import Export Exchange rate E/S Workings by you ............ Positive Negative = 1.93% premium Scenario 2: Considering the calculations you have done so far, you need to attend to a number of import and export transactions for goods that companies in the United States expressed interest in