1) ABC is a Canadian company, sells frozen food to Japan. Every month ABC gets a payment of JPY 15,000,000. Exchange rate is= .01 CAD/JPY. Volatility of CAD/JPY exchange rate is= .002. Give a range for ABC’s exposure, measured in the CAD? Without using a money market hedge, options, or futures how would you suggest ABC to decrease its foreign exposure?
2) A productivity index of= 110% means that the company’s labour costs would have been 10% higher if it had not made production improvements. Now refer to Income Statement in Baldwin's Annual Report. Direct labour costs for Baldwin were= $32,486. These labour costs could have been= $20,000 higher if investments in training that increased productivity had not been made. What was the productivity index for Baldwin which led to such savings?
i) 38.4%
ii) 155.4%
iii) 161.6%
iv) 44.6%