1. ABC Limited is a multinational company located in the United Kingdom, producing durable consumer goods and sell across sev eral counters. It purchases it materials from overseas market and involved with several forex related transactions. The top man agement of the company is very much concern about the reported foreign exchange losses. The external finical environment has become highly volatile, the top management is intended to identify and implement strategies to mitigate the foreign exchange risk of the company 2. Following information related to the money market has been given to you. Spot $/ 1.2657-1.2677 3-month forward rate $/ 1.2857 - 1.2877 Current interest rates: US prime 4.2% -4.8% per annum UK LIBOR 2.6% -2.9% per annum CNC Limited is due to receive $6,000,000 in 3 months' time from a customer for the United States. You have been asked to write a report to the management addressing the following issues. a. Explain the three types of risk related to foreign exchange, (3 marks) b Critically analyses the possible methods ABC Limited can use to mitigate the transaction risk (5 marks) C. Advice the management of ABC Limited, the possible outcome of using the forward contract to hedge the risk (3 marks) d. Advice the management of ABC Limited, the possible outcome of using the money market to hedge the risk (4mark)