You are a handicraft dealer in Australia and import materials from New Zealand. You have accounts payable to your suppliers from New Zealand in New Zealand Dollars.
a) Explain the exposure risk your company will face if you do not hedge transactions?
b) If you hedge, which hedging method would you use? (Forward Market Hedge, Money Market Hedge,Options Market Hedge,Cross-Hedging Minor Currency Exposure,Hedging Contingent Exposure or Hedging Recurrent Exposure with Swap Contracts)
State your reason why?