1. Michelle, a financial manager at American Company, wants to hedge a payment that her company will make in Australian Dollar. What should Michelle do? *

a. She should hedge against a drop in AUD, and thus buy AUD futures

b. She should hedge against a drop in AUD, and thus sell AUD futures

c. She should hedge against a rise in AUD, and thus buy AUD futures

d. She should hedge against a rise in AUD, and thus sell AUD futures

e. None of the above

2. Jana bought 5 April contracts. If the AUD is trading at USD1.2512 at the end of April, what is the profit or loss on Jana's position? *

a. ($1,200.00)

b. ($1,350.00)

c. ($5,950.00)

d. ($1,100.00)

e. None of the above