a) The Bank of Botswana (BOB) has set the following exchange rates for the Botswana Pula...

 

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a) The Bank of Botswana (BOB) has set the following exchange rates for the Botswana Pula against the Australian dollar: BWP/$ 0.7980-90 A$/$ 0.8613-17 Required: i) An Australian firm asks the bank for an A$/BWP quote. Determine the cross-rate that the bank quote? (5 marks) ii) Suppose the quote on Botswana pula is R1.624-31. If you converted R10,000 to Botswana pula's and then back to rands, establish the amount of rands that you will end up with? (5 marks) b) You've just started working for a newly founded Multinational Corporation in Botswana as a Graduate Trainee in the International Financial Transactions Department. Your department's senior manager has indicated that they are concerned about transaction risk that the organization will be exposed to. You have however highlighted to them that there are several methods of managing exposure to transaction risk. You are required to prepare a report to senior management that explains at least seven (7) methods that the organization can use to reduce or minimize their exposure to transaction risk. (15 marks) a) The Bank of Botswana (BOB) has set the following exchange rates for the Botswana Pula against the Australian dollar: BWP/$ 0.7980-90 A$/$ 0.8613-17 Required: i) An Australian firm asks the bank for an A$/BWP quote. Determine the cross-rate that the bank quote? (5 marks) ii) Suppose the quote on Botswana pula is R1.624-31. If you converted R10,000 to Botswana pula's and then back to rands, establish the amount of rands that you will end up with? (5 marks) b) You've just started working for a newly founded Multinational Corporation in Botswana as a Graduate Trainee in the International Financial Transactions Department. Your department's senior manager has indicated that they are concerned about transaction risk that the organization will be exposed to. You have however highlighted to them that there are several methods of managing exposure to transaction risk. You are required to prepare a report to senior management that explains at least seven (7) methods that the organization can use to reduce or minimize their exposure to transaction risk. (15 marks)

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The question presented is related to foreign exchange rates and transaction risk management It entails two parts one is a calculation of cross rates for currency exchange and the other is a theoretica... View the full answer