1. Discuss three reasons why firms hedge their risk.
2. You are called in as a financial analysis to appraise the bonds of orseln's clothing store. The $1000 per value bonds have a "annual interest of 10% which is paid semi annually. The yield to maturity on the bond is 10% annual interest. There are 10 years to maturity
3. Assume the spot exchange rate is A$.9840. The expected inflation rate is 1.8 percent in Australia and 1.6 percent in the U.S. What is the expected exchange rate one year from now if relative purchasing power parity exists?
A$0.9860
A$.9817
A$.9744
A$.9675
A$.9588