BAFI1019 International Finance

You work for firm XYZ situated in Australia, and your boss has become concerned about the current economic environment, especially as it is related to the different types of exposures that your firm may face in the near future. You are asked to provide a report, which evaluates how your firm is exposed, the risk management implications for your firm, and possible hedging strategies. You are also required to provide a recommendation for what your firm should do: The assignment will be released at 1pm on 19 April 2021(Singapore Time)and is due by 1pm 26 April 2021(Singapore Time). You will begiven 7 days to complete the assignment.You work for firm XYZ situated in Australia, and your boss has become concerned about the current economic environment, especially as it is relatedto the different types of exposures that your firm may face in the near future. You areasked to provide a report, which evaluates how your firm is exposed, the risk management implicationsfor your firm, and possible hedging strategies. You are also required to provide a recommendation for what your firm should do.Information about Firm XYZ:1.Thefirm imports medical equipmentto Australia from foreign supplierslocated in Singapore, the United States and the Germany.2.The firm also exports pharmaceuticals from Australia to Singapore.3.The firm has a payment of 5,000,000 SGD due in 3 months to their supplier in Singapore,a payment of 4,000,000 USD due in 3 months to their supplier in US, and a payment of 500,000 EUR due in 1-monthtime to their supplier in Germany.4.The firm is due to receive 2,000,000 SGD from their customer in Singapore in 4 months. 5.The firm also have 2,000,000 USD deposited in a bank in New York and the deposit is due to mature in 2months.The money was deposited 10months ago at an interest rate of 1.5% p.a.You are required to prepare a report, which should contain the following information:1. Use the information above to consider the types of exposure your firm may face.2. Discuss the firm’s risk management implicationsand designhedging strategiesfor the firm. You also need toevaluate the hedging outcome –what will the outcome be if exposure is hedged and what will the outcome be if exposure is not hedged.3. You should consider the effect of thecurrenteconomic environmenton foreign exchange market, demand for exports/imports, supply of exports/imports and other relevant economic indicators,andrelatethis to how this may impact the firm